September 10, 2010

Micro'MAX'ing Nokia's share


We can move on to greener pastures by the time Pepsi and Coke max it out as per the earlier post. Speaking of Max, there is actually another Max who is challenging another giant in another category. Welcome to the David-Goliath scenario where a local homegrown company which has grown by leaps and bounds in the past six months is taking on the might of a Finnish phone company. Micromax mobiles is suddenly threatening to overthrow Nokia’s marketing efforts. With a strong distribution network, sports sponsorships by the dozens, interactive campaigns and a wide array of low-cost products, Micromax is surely more than a local challenger to Nokia, the current market leader. It currently occupies the third position in the market after Samsung with a six percent market share and growing rapidly.
 Micromax, founded by Rajesh Agrawal started as a computer distributor for companies like Dell and HP in 1991. In 2008, they forayed into mobile phones. After the success of the X1i (30 days on a single charge and priced at two thousand rupees) in the rural market, Micromax eyed the more suave urban area. Micromax has two aces up its sleeve — a keen eye for what the customer needs, and the ability to swing their supply chain. With over 55 companies operating in the market and over 60 percent share controlled by Nokia alone, Micromax was still confident of tapping into unexplored niches and categories through their product offerings and marketing efforts. The recent product strengthening has been on the dual-sim and QWERTY keypad forefront at reasonable prices-offerings Indian consumers have lapped upto. The company also gives five percent commission to each of its distribution partners (450 distributors and 50000 retailers) but does not offer any credit. Obviously, it can't if it is offering three times as much commission as Nokia and yet offer credit! This has also helped them build a reliable and fast cash cycle.
Micromax introduced Akshay Kumar and partnered with Lowe to roll in their motion sensing game phone and signed Twinkle Khanna to endorse the Swarovski crystal studded Bling edition. Another of their innovative products has been a phone that doubles up as a master remote for your household appliances. Critics say that Micromax's rise has been fuelled by the Government's decision to ban Chinese mobiles that lacked an IMEI number. But then there were other low cost players too, so why only Micromax?When the telecom bubble started to grow, we saw companies like Lava, Karbonn, Lemon, Zen, Max, Onida and Videocon jump into the mobile boat. However, the consumer has always been selective and with so many options, it was but obvious that a few will survive. Micromax was lucky to be one of them and of course with its surprising products and campaigns it was bound to! Lava and Karbonn threatened to overshadow it once using the same marketing strategies but they are surely feeling the pinch now. After all, how many Lava and Karbonn adverts you come across these days? The two recent models by Micromax, promoted widely in the recent Cricket tri series in Sri Lanka, Q6 and Q7 are giving Nokia’s premium models a run for their money. Compare Micromax's 26 models with the wide array of Nokia's cell phones and you'll find why Nokia is hell bent on killing its own instruments even before they complete a technological cycle.
Mr. Wahid Nasirullah, who has a small mobile store near Sewri station amongst several stores in the surrounding says, “Earlier on, I used to stock only big names like Nokia and Samsung but since the Chinese handsets came in, we saw local manufacturers coming up with their own answer. As the public likes it, we have to stock them. Now my store has more Micromax mobiles than Nokia ones.” Small mobile handset players are going to take over the market. Mobile penetration is high and most of the untapped market is the lower segment of Sec C and Sec D consumers, for whom a QWERTY keypad phone at a throw away price is equal to owning an I-phone, well almost! Ask Mr. Nasirullah the reason for Micromax’s success and he answers, “The cost factor! Micromax is giving the same things as Nokia and more at half the price and people are intelligent, they don’t want the brand. As long as they’re getting good warranty and good service no one’s bothered.”
True! Mr. Nasirullah’s store is one amongst the thousands of such unorganized retail mobile outlets which account for more than sixty percent of mobile sales in the Indian market (thanks to their selling handsets lower than stores like Croma and The Mobile Store), and he might just have made a valid point. Due to the sheer competition, the mobile market is almost getting commoditized. Nokia is coming out with a new model almost every week. Even as I write this, Nokia’s engineers are working on a cost-effective phone for the Indian market. The 2600, 2610, 2300, 2310, 5310, et al and God knows what they have dumped here, to counter the effect of the Chinese mobiles and local manufacturers like Micromax. Today, Nokia launched two new models, C1 and C2 in the entry level segment with dual-sim option (earlier on, they did not have a dual-sim phone. See!) and Micromax too, is not taking it easy and coming out with handsets like pancakes. The battle field is more on the price front than the feature as the focus has been to tap the bottom of the pyramid segment and make mobiles more common than tissues in your bathroom. So will Goliath crush David or will David hurl the stone just in time to conquer Goliath? Whatever be the result, David might just have to change his brand name and reposition himself as he is surely not ‘micro’ anymore!
With hugs and kisses to the Consumer, 
The Young Marketer.

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