COMPETITIVE STRATEGY

MICROMAX THE INDIAN INNOVATOR

Can Micromax make the leap from Indian to global brand?
Faculty Guide: Naveen Coomar
SUBMITTED BY: ANKUR MAKHIJA
ROLL NO .55
IIFT PT 12-15
What is Competitive Strategy?
Competitive Strategy is defined as the long term plan of a particular company in order to
gain competitive advantage over its competitors in the industry. It is aimed at creating
defensive position in an industry and generating a superior ROI (Return on Investment).
Such type of strategies plays a very important role when industry is very competitive
and consumers are provided with almost similar products.
Before devising a competitive strategy, one needs to evaluate all strengths,
weaknesses, opportunities, threats in the industry and then go ahead which would give
one a competitive advantage.
According to Michael Porter, competitive strategy is devised into 4 types:
1. Cost Leadership
Here, the objective of the firm is to become the lowest cost producer in the industry and
is achieved by producing in large scale which enables the firm to attain economies of
scale. High capacity utilization, good bargaining power, high technology implementation
are some of factors necessary to achieve cost leadership. E.g. Micromax mobile phones
2. Differentiation leadership
Under this strategy, firm maintains unique features of its products in the market thus
creating a differentiating factor. With this differentiation leadership, firms target to
achieve market leadership. And firms charge a premium price for the products (due
to high value added features) Superior brand and quality, major distribution channels,
consistent promotional support etc. are the attributes of such products. E.g. BMW,
Apple
3. Cost focus
Under this strategy, firm concentrates on specific market segments and keeps its
products low priced in those segments. Such strategy helps firm to satisfy sufficient
consumers and gain popularity. E.g. Sonata watches concentrates on lower segment
customers.
4. Differentiation focus
Under this strategy, firm aims to differentiate itself from one or two competitors, again in
specific segments only. This type of differentiation is made to meet demands of border
customers who refrain from purchasing competitors products only due to missing of
small features. It is a clear niche marketing strategy. E.g. Titan watches concentrates on
premium segment which includes jewels in its watches.
Hence without following anyone of above mentioned competitive strategies, it
becomes very difficult for firms to sustain in competitive industry.
MICROMAX AN INTRODUCTION
Micromax Mobiles is one of the leading mobile companies in the World today. 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% and close to 8% market
share in India. With an in depth understanding of rapidly changing consumer
preferences coupled with the use of advanced technologies, Micromax has been able to
differentiate itself from the competitors through innovation and design.
The brand took on the leaders in the category with specific products that addressed
different customer needs. The company has focused their efforts towards creating life-
enhancing mobile phone solutions and wireless technologies that cater to the
increasingly evolving needs of mobile users in India.
Micromaxs realization that the rural market is a large part of the Indian market made it
evolve a strategy for reaching the villages. It also offered products at very low prices,
which would suit the rural pocket, thus providing value for money (VFM) products for the
price sensitive rural customers. It also focused on features that addressed the specific
challenges facing those living in the rural areas. Micromax calls its strategy sell deep
and sell more.
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. This helps
the company achieve economy of scale and keep operational costs low; thus achieving
its objective of providing essentially value for money (VFM) products.
HOW MICROMAX FOLLOWS COMPETITIVE STRATEGIES?
Micromax targets the mass market with its products, but combines this broad scope
with a differentiation strategy based on design, branding and user experience that
enables it to reach the Indian common man.
Cost leadership Strategy
This strategy involves the firm winning market share by appealing to cost-conscious or
price-sensitive customers. This is achieved by having the lowest prices in the target
market segment, or at least the lowest price to value ratio (price compared to what
customers receive). To succeed at offering the lowest price while still achieving
profitability and a high return on investment, the firm must be able to operate at a lower
cost than its rivals. There are three main ways to achieve this.
The first approach is achieving a high asset turnover. These approaches mean
fixed costs are spread over a larger number of units of the product or service,
resulting in a lower unit cost. Higher levels of output both require and result in
high market share, and create an entry barrier to potential competitors, who may
be unable to achieve the scale necessary to match the firms low costs and
prices.
The second dimension is achieving low direct and indirect operating costs. This
is achieved by offering high volumes of standardized products, offering basic no-
frills products and limiting customization and personalization of service.
Maintaining this strategy requires a continuous search for cost reductions in all
aspects of the business.
The third dimension is control over the supply/procurement chain to ensure low
costs. This could be achieved by bulk buying to enjoy quantity discounts,
squeezing suppliers on price, instituting competitive bidding for contracts,
working with vendors to keep inventories low using methods such as Just-in-
Time purchasing or Vendor-Managed Inventory.
Differentiation strategy:
Differentiate the products in some way in order to compete successfully. A
differentiation strategy is appropriate where the target customer segment is not price-
sensitive, the market is competitive or saturated, customers have very specific needs
which are possibly under-served, and the firm has unique resources and capabilities
which enable it to satisfy these needs in ways that are difficult to copy. These could
include
patents or other Intellectual Property (IP)
unique technical expertise (e.g. Apples design skills)
talented personnel (e.g. a sports teams star players or a brokerage firms star
traders)
Successful brand management also results in perceived uniqueness even when the
physical product is the same as competitors. This way Starbucks could brand coffee,
and Nike could brand sneakers.
Focus or Strategic scope
This strategy describes the scope over which the company should compete based on
cost leadership or differentiation. The firm can choose to compete in the mass market
with a broad scope, or in a defined, focused market segment with a narrow scope. In
either case, the basis of competition will still be either cost leadership or differentiation.
In adopting a broad focus scope, the principle is the same: the firm must ascertain the
needs and wants of the mass market, and compete either on price (low cost) or
differentiation (quality, brand and customization) depending on its resources and
capabilities.
Hence MICROMAX has successfully implemented Michael Porter
three competitive strategies.
MICROMAX OBJECTIVES
Focus on urban market specially youth 18-25 years Micromax is Focusing on
smart phones and tablets. As smart phone is going to be the future of mobile
market.
To start new plant and reach market share of 20% and to increase market share,
it is essential to increase production capacity.
Focus on international markets. On making strong focus on rural market and
urban market in India, Micromax needs to expand to international markets and
enter into neighboring Indian countries, south African countries etc.
PRODUCT INNOVATIONS
Micromax product portfolio embraces more than 60 models today, ranging from
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.
It also introduced the dual SIM and though the dual SIM feature is present in 20-
30%of all mobile handsets sold in India, the company offers this feature on 22
out of 26 phone models it sells in India. All its products were designed to suit the
domestic palette and majorly all designs focused on utilitarian concept.
PRODUCT DIFFERENTIATION
Micromax reaches Indian mass by launching new and innovative products since
inception. It has many first to its credit like
First Long Battery Life Phone with 30 days battery backup( 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 Womens Line of Devices (Q55 Bling phone- First womens 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 blue tooth ( 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, powered with 1GHz dual core NVIDIA Tegra 2 Processor)
TARGET MARKETS
Currently Micromax is dominating the rural market. Initially the marketing strategy of
Micromax was to target rural market. They are basically catering to the need of the
customers of the rural area. For example the first mobile Micromax introduced in rural
area was having the battery backup of 30 days which was catering to the need of the
rural market of inconsistent power availability. Other markets which they focus are as
follows
TARGETING WOMEN
On the occasion of Mothers Day, Micromax announced the launch of its latest Android
phone targeted at women.
TARGET YOUTH
As smart phones are future of telecommunication industry, Micromax has started
focusing on it strongly.
TARGET PROFESSIONALS
Professionals keep two phones in todays life: One for Professional use One for
Personal use Micromax came up with Dual SIM mobile phones. Micromax focuses on
this target to cater need A single phone with Business and Private use with separate
numbers and bills.
MICROMAX DISTRUBUTION NETWORK
Apart from the Product, Price and Promotion Micromax has shown strength in another
significant aspect that is distribution network.
Achieving supply chain superiority or excellence is within the reach of any company.
However, it requires a vision, as well as the organizational imperative and willingness to
invest in the right direction.
For the B2C model, higher margins up to 15 per cent were offered to the dealers, which
was higher than the industry average of 6 per cent to 10 per cent. And distributors were
offered higher margins than what Nokia offered. This helped them penetrate the market
deeper into the urban markets. In B2B model, where corporate selling was involved, tie
ups with major corporate houses saved the margins of the distributors and Micromax
could provide the corporate houses a lesser price than the market. Thus, the target
market of professionals was reached.
Micromax has a 3 tier distribution network in India, 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, owned
by third party.
MICROMAX MANAGEMENT
Micromax focuses on the pulse of the consumer and hence constantly invests
into strengthening the product portfolio though R&D and innovative marketing
strategies.
The product portfolio embraces more than 60 models today, ranging from feature
rich, dual-SIM phones to QWERTY, touch-enabled smart-feature phones and 3G
Android Smartphones.
Also lay special focus on the products to enhance the customers overall
experience with the device. Most of the products come with innovative packaging
and bundled accessories.
Globally, Micromax caters to a varied target audience having their focus majorly
on the youth.
The Strategy focuses on innovating, designing and using the latest technologies
to develop products at affordable prices.
Products are tailor-made to suit the needs and aspirations of the growing
consumer base in the international markets.
The other aspect of it success is that Micromax is one company that has managed to
understand the Indian consumer psyche much better than the multinationals as well as
the home-grown companies.
For its Entry level tablet Micromax strategy revolved around education and
entertainment (edutainment). It tied up with Pearson, Everonn, Vriti (for
education) and for entertainment it had tied with Bigflix, Hungama, Indiagames
and Zenga. With it Micromax saw an impressive sale of 65,000-70,000 per
month.
In the smartphone segment, the company incorporated applications that made its
products stand out despite the low price stamp; it had Aisha with the same
features as Apples Siri, a voice-controlled personal assistant. Micromax also
launched a mobile messaging application HookUp.
COMPETITORS
Micromax knows that there are many established brands in Mobile Phones industry like
Nokia, Samsung, LG and several other local as well as Chinese manufacturers .Some
major competitors and their strategy and strengths are identified as below: Nokia,
Samsung, Apple, Htc
VARIOUS STRATEGIES FOLLOWED BY MICROMAX
MICROMAX MARKETING STRATEGY
Marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a suitable
competitive advantage.
Driven by growing aspirations of the Indian mobile users, Micromax has geared up to
bring about a paradigm shift in the way cell phones are used by introducing
groundbreaking mobile solutions technology.
Micromax marketing strategy is to improve the visibility in the urban markets by
improving awareness of customers for our products and also building brand image.
When Micromax entered the segment, it followed a simple strategy of bringing innovative
products for the consumers and coupled it with smart marketing. The companys success
could be attributed to the Out of the Box thinking and thus providing Innovative &
insightful products to the masses.
At Micromax, the target audience is youth who want innovative, stylish phones that are
affordable. Today the mobile phone category is driven by youth, with about 60% of the
users under the age group of 20-40 yrs and Micromax utilizes every opportunity to
connect with the youth.
Micromax understands that building connect is all about being involved with the
customers and also giving them the value for money.
Through their products and innovative campaigns, they aim to provide value additions
to the Micromax users and have him or her involved by creating unique brand
proposition.
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.
BUY VS BUILD STRATEGY
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.
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.
AGGRESSIVE THINKING
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. This strategy helped them to tee off Nokias Asha phones and Samsungs lower
end models.
DIRECT COMPETITION
Many research agencies indicate that Micromax is now standing second to Samsung in
Indian market. Though Micromax threaten to reduce Samsungs share initially, now it
seems to be fading. Their market share has dipped from over 20% to now 15%.
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.
CONSUMER CONNECT THROUGH CONSUMER BRANDING
Micromax realized in its early years itself that though it made a name in inventing
surprises it is not a sustainable strategy in an industry which is a crowded market. They
had to provide something more sustainable to retain the customer to itself. This could
be attained through connecting with customers and establishing a long lasting
relationship with them. The answer was consumer branding.
According to American Marketing Association, brand is a name, term, sign, symbol or
design, or a combination of the intended to identify the goods and services of one seller
or group of sellers and to differentiate them from those of other sellers.
MICROMAX AND HUGH JACKMAN
Successful entrepreneurs globally have had
to take a decision like this at some point or
the other to ensure their company keeps
growing. Micromax proved no exception.
Micromax seems to be ready for heavy
marketing investments. Appointing the
Hollywood star answers the need for
Micromax to build an international image.
With this, Micromax becomes the first
Indian mobile operator to have roped in a
Hollywood star as its brand ambassador.
Micromax is largest handset seller in India
after Samsung and first Indian based mobile
handset brand that came up with this much
PRODUCT STRATEGY
On the product side, Micromax has a wide range of phones with different features and
thus offering variety to the customers.
Micromax has a lot of interesting and thoughtful products. Micromax has been able to
successfully identify the needs of customers and design products appropriately.
Micromax believes that consumers in India have unique preferences with respect to
mobile handsets such as long battery life, dual GSM capability, low-cost QWERTY
phones, universal remote control and gaming phones. Also, the company has invested
heavily in the product development as of now to capture market share in urban
PRICING STRATEGY
Its at the core of Micromax to serve the customers by proving them with lower cost, value
for money products. Thus Micromax will adopt penetration pricing in the urban market
because placing our product at a lower cost will serve our purpose and make the customer
rethink before buying other competitors product such as Nokia, Samsung, etc which are at
a high price segment.
So with a lower price they provide with almost same functionality which in turn help them
in gaining a better share in the urban market as they also want lower prices phones with
higher functionalities which has been proved by their marketing survey.
PROMOTION STRATEGY
To increase visibility further, Micromax bombarded the market by advertising through outdoor,
online, radio, exchange schemes and promotions via social causes. The motive of this
strategy is to increase our visibility in the urban markets. So making people aware about
Micromax incur high promotional expenses in terms of
I. Hoardings and banners
II.Advertising online
III.Sponsoring in the social cause events
PLACE STRATEGY
By placing the product in popular stores like Croma, The mobile store, Reliance Digital etc.,
high visibility was assured along with the competitive brands. Tie ups with local distributors for
easy availability helped to tap the customers who did not visit the popular stores.
MICROMAX VARIOUS OTHER BIG COLLABORATIONS
MICROMAX AND VODAFONE
Micromax announced a strategic partnership with Vodafone India. The partnership aims
to drive data growth in India with an exciting deal for the internet savvy
generation. Under this new partnership, Micromax and Vodafone India are coming
together to provide a more fulfilling device connectivity and experience.
MICROMAX AND AIRCEL
Mobile handsets maker Micromax has tied
up with telecom services provider Aircel to
offer cheaper voice and Internet services to
customers. Under the deal, buyers of
Micromax smartphone and tablet
computers will be able to get Aircel voice and Internet services at competitive rates.
Aircel opted for Micromax because of the latters affordable range of large-screen
smartphones, or phablets.
MICROMAX AND PANTECH
Micromax, which recently announced international expansion plans, looks to become
the first Indian handset maker to enter the Russian market. According to a Reuters
news report, Micromax has expressed interest in buying into Pantech, South Koreas
third largest Smartphone.
Micromax, which already sells its handsets in Saarc and Russia, would also get access
to markets like the US and Japan, that Pantech serves. It has plans to increase
international presence and climb up from the position of worlds 10th largest mobile
phone maker.
success.
MICROMAX AND MICROSOFT WINDOWS
The Domestic handset maker Micromax
becomes a new partner of the Microsoft and
will offer Windows Phone 8.1-powered
Smartphones. Micromax will be one of the
first companies to launch Googles low-cost
Android One handset in India.
Micromaxs growth has been significant that
global companies have started to partner
with the handset maker in their entry into the
competitive Indian smartphone market.
Microsoft chose the New Delhi-based firm to
launch a Windows 8.1 low-cost cell phone that is powered by Qualcomms chipset.
SWOT ANALYSIS OF MICROMAX MOBILES
Strengths
Innovative products and features- Marathon battery mobile phones with a 30-day
battery life, phone which is programmable as a universal remote control, gravity
phones are some of the features which have increased the popularity of the
product.
Low cost of production For a company that has been importing all its devices
from China, Micromax has now taken a new turn by making a few products at
home. Both the R&D and design are carried out in India.
No debt burden- Micromax has no debt on its balance sheet. The company
doesnt believe in taking loans from financial institutions for expansion. It had, in
the past, only raised one round of funds from TA Associates and Sequoia
Capital, which together hold about 20 per cent of Micromax. The rest of the stake
is held by the four founders.
Effective promotion campaigns- Micromax has been promoting its products
through famous celebrities and has also had tie ups with MTV.
However, of late it has set up a plant in Baddi in district Solan in Himachal
Pradesh to offer Indian products to Indian consumers. The major attractions for
setting up plant in Baddi were the slew of tax incentives that the Government
provided. These were a 100 per cent outright excise duty exemption for a period
of ten years from the date of commencement of commercial production, 100 per
cent income tax exemption for an initial period of five years and thereafter 30 per
cent for companies for a further period of five years, and capital investment
subsidy of 15 per cent on plant and machinery subject to a ceiling of Rs 30 lakhs.
There were many tax incentives provided by the State
Weaknesses
Perception of low-quality Chinese brand- Micromax has a manufacturing unit set
up in china which has strengthened this perception among people.
Low customer acquisition and retention services which can be increased by
providing better after sales services.
Opportunities
Increase penetration in urban market. Entry into international markets-Micromax
has the potential to make its presence felt on global scale eventually as it
establishes itself in the domestic market.
Exchange offers will also be a major tool for customer retention as the customer
will be getting additional discount on the new Micromax phone he buys by
exchanging the older one. Thus this will help create a chain of transactions with
customers.
. The company is also working on launching smartphones based on 4G once the
long-term evolution infrastructure is in place, which would be also priced right.
Threats
Increasing competition from local and international players- With well established
players like Apple, Nokia, Samsung, etc Micromax faces a tough competition
from these players.
But in todays fast paced world, where change takes place in nano seconds, it
becomes increasingly difficult to compete only on product functionality and
innovative product features. The first mover advantage is transient (very short
lived). Therefore, only focusing on the product and attaining manufacturing
efficiency would not do. Organizations need to look for more sustainable
strategies. The players need to look beyond core product and focus on
complementary assets like supply chain efficiency, brand equity, and relationship
management with customers as well as dealers to emerge a winner.
Replication of business model by competitors- Micromaxs business model has
been replicated by many new players which again pose a threat to Micromax
Micromax: The king of Competitive Advertising
Micromaxs rebellious sojourn began early with its Micromax A70 campaign that
mocked the popular iPhone Ad simply replacing the iPhone with the sound of throat
scratching. While Apple and iPhone were a little too big to be worried by such gimmicks,
Micromaxs Ads definitely rang home the message to typical consumers.
Micromax isnt the first company to think along the lines of hitting straight at the heart of
competitor with Ad campaigns. Since time immemorial both Coke and Pepsi have been
at loggerheads with each other both on their marquee products as well as on
MoutainDew and Sprite commercials.
DRAWBACKS IN MICROMAX APPROACH
Lack of Innovation and originality
Micromax may be busy taking on its international competitors by simply making
their technology cheaper and more affordable but its approach may endanger the brand
in future. While Micromax is a fairly innovative company with some interesting additions
to its Smartphones, from Gesture control to Voice assistants, it is often the standard
specs that are innovated upon.
Micromax has yet to file any significant patent. The company continues to use existing
and often out dated processors to produce its affordable Smartphones and insists on
using design elements that have been used by its international competitors.
For them to be taken seriously, Micromax may have to slowly break away from their
competitive approach to build on newer technologies and bring in more firsts to the
Indian market.
Micromax has done this significantly in the feature phone segment, but has not yet
managed to do so in the Smartphone segment.
Micromax made some cheeky advertisements making fun of Apple for being costly and
then they took on Samsung with advertisements targeting their lower end series. But
you cant deny that fact that being in a mobile phone market for more than half a decade
also helped them in gaining the faith and trust of buyers. Value for money factor
exceeds quality expectations
LARGER LAUNCHES
The year 2012 has been very active for
the company. Micromax made its debut
in the smartphone landscape launched
22 smartphones in the Indian
market, the maximum so far by any
manufacturer. If we compare other
manufacturers, then Samsung
launched only 4 new models.
MICROMAX PRESENT SCENARIO
In its home market, Micromax is struggling to win over the top position in the
Smartphone segment from current leader Samsung.
According to International Data Corporations (IDC) report for Q2 2013 for India,
Micromax crossed the 2 million units mark in sales. Though the positions of global
vendors like Samsung, Nokia, Blackberry and Apple are strong in India, their market
shares have been steadily dropping due to intense competition from the local vendors
including brands like Micromax and its competitors like Karbonn, Lava, Intex and
Celkon.
The IDC report says While Samsung still controls 20% of the market share in overall
vendor share, Micromax has
been pushed to 12% of market
share. Nokia is witnessing a
growth and is at 13% while
Karbon is in neck-to-neck
competition with Micromax at
13% of the market share.
MICROMAX TREMENDOUS GROWTH
The Micromax is the second largest Smartphone player in India, held about 16
percent market share in Q4 2013, according to IDC data.
In 2006/07, when Micromax, today Indias largest domestic handset maker, reported
revenues of Rs 16 crore, Rahul Sharma and his three co-founders thought they
could make it a Rs 1,000-crore company in a few years. They had no time frame in
mind. But just seven years later, Micromax has grown about 500 times, to Rs 7,500
crore in 2013/14. The formula was simple: offer consumers the handsets that they
wanted - the qwerty "Q" series in 2009, the Swarovski-encrusted Bling series for women
in 2010, and more recently, Android touch phones - at some of the lowest rates in the
market.
Micromaxs leading rivals have changed over the last seven years. In the feature
phones era, it fought Nokia. When qwerty was a rage, it was pitted against BlackBerry.
Now it is taking on Samsungs and
Apples smartphones. While Nokia and
BlackBerry are struggling, Micromax has
grown stronger. And Sharma, who drives a
Bentley Continental GT, is dreaming
bigger: he wants Micromax to be among
the top five globally in five years.
SUCCESS OF MICROMAX
A consumer Electronics Company based in India primarily known for its smart phone
manufacturing. Micromax started as a software company in 2000 but started getting
recognition only after they started their mobile phone manufacturing operation in 2007,
and became the largest local producers in 2010.During their rudimentary stage in India;
Micromax was fighting the big names: Nokia (The erstwhile largest player. Microsoft
acquired the giant when they failed due to the lack of pace in their innovation),
Samsung, LG, Sony Ericson and others.
Micromax tasted success because they adopted strategies that are key to a company
adopting the Blue Ocean strategy. Interestingly, as with the case of Blue Oceans,
Micromax created a mobile market demand for them by catering to the local Indian
tastes, needs, preferences and issues. They did not look far beyond the Red Ocean.
They just restructured the boundaries of the existing Red Ocean. Micromax created a
new space, challenged the competition, expanded and catered to the demand and
broke the barrier of value-cost trade-off.
India has a mammoth demography spread across the rural and urban areas. Now cell
phone being a key element of business. However, the truth remains that the phone
needs to be charged repeatedly. India has imminent power issues, and especially in
rural areas. Micromax wanted to create demand by revolving their selling point that
addresses the issue. They launched their first model named X1i, which claimed to have
battery charging that lasted 30days.This triggered their network effect.
In India, there is hardly any concept of locked phones. Again, Mircomax differentiated
with smart innovation that fit the local needs. They launched the first dual-SIM phone,
which could support two active SIMs at the same time. Other global brands found it
difficult to launch their dual-SIM versions very soon. Post that success, where they
made themselves visible amongst the bigger players, came the era of smart phones.
Although only around 20% mobile phone users in India use smart phones, Indian
market is 3rd largest Smartphone market after China and the US. Owing to the style,
features and capabilities, with the changing trends everyone aspires to have
Smartphones. However, not all could afford the price for a high-end Samsung model or
an iPhone, which is nothing short of a status symbol in India.
Micromax appealed the Indian emotion, and targeted the youth by launching a series of
low-priced versions of Smartphones. And yes, all Smartphone are powered by Android
OS. Android was easily the biggest factor for Micromaxs success. Market leaders are
using android too. Hence, it brought about standardization of mobile OS, and in-turn
product differentiation became difficult.
In this scenario, the Samsungs and the LGs were at a disadvantage because Mircomax
launched a series of smart phones similar to their high-end models at a price a fifth as
theirs. They do not build components. They smartly customize it by using cheaper
products. So far, this formula is working guns for them, at least in India. They have sold
large volumes of
Smartphones.
Their present
target is to unseat
Samsung from the
top position, which
holds the highest
market share.
Micromax is also
increasing its
market to other
countries like
Nepal,
Bangladesh, Sri
Lanka and Russia. In addition, they are increasing the product line by entering into
Tablets, LED TV and 3D Data card market.
All the above have insured that a little known Indian mobile handset manufacturing
company has been able to beat the existing competition in India via creation of Blue
Ocean within known Red Ocean market space.
Blue Ocean Strategy suggests that an organization should create new demand in an
uncontested market space, or a "Blue Ocean", rather than compete head-to-head with
other suppliers in an existing industry.
CONCLUSION
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.
Micromax is a darling of the Indian middle class and rightly so. But its approach thus far
has been questionable with respect to Advertising and product pitching. Perhaps its
time for Micromax to build on their own brand value than derive from the brand value of
competitors.
Micromax India, which started out as the go-to company for budget mobilephones, has
emerged quite positively in the smartphone market. As markets develop mobile phone
manufacturers will have to adapt their value chain approaches and re-think the basis of
future competitive advantage. Micromax has broken the norm and proved that even a
small player can make a place for itself.
Therefore, one can conclude, that being big and strong with an impressive balance
sheet is no longer a guarantee of long term survival or a guarantee for entry into a
highly competitive market space. In the struggle for survival, the fittest win out at the
expense of their rivals and make a place for them because they understand the
environment and also adapt themselves best to their environment.
Micromax tasted success because it understood that India is predominantly a rural
economy; and it used its knowledge of India and business acumen to mine consumer
insights and thereby create impactful product launches. Further it supported its efforts
with an efficient manufacturing system, agile and responsive supply chain, consumer
branding and effective dealer and consumer management strategies.
Micromax needs professional management for various reasons. For one, it is looking
beyond the handset business. While Sharma maintains the markets in India and other
developing countries are still not fully tapped, especially the Smartphone segment, the
company has already ventured into LED televisions. They require strategic direction to
take the companys billion dollar business to the next level of growth and expansion.
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