Post on 06-Nov-2015
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Strategy is thinking about a choice and choosing to stick with your thinking.
You cannot be everything to everyone. If you decide to go north, you cannot go south at the same time.
Jeroen De Flander
Scope of the Project
The study aims at analyzing the competitive strategy of Micromax in India. When Micromax launched its mobile handset business in India,
there was no dearth of handset manufacturers in India or in the world alike. But Micromax used excellent distribution, marketing and pricing
strategy to get into the already saturated handset market in India.
We will focus our study on these strategies of Micromax which gives it a competitive edge over other existing mobile handset companies. Since
Micromax has many firsts to its name, we will analyze how Micromax is able to offer its customers the innovative features in its smartphones at
such affordable cost.
Finally we will try to find out the various factors that could be improved in the future so that Micromax could generate more revenue and
profits.
Objective
The objective of this project is to analyze the competitive strategy adopted by Micromax in distribution, pricing and marketing to position itself
in already saturated market of mobile handset in India. The major focus of study would be to examine closely the unique resource leverage
strategy adopted by Micromax in order to provide high-end feature phone at affordable price. We will identify and conceptualize the strategies
of Micromax in tapping especially the Geographic and Category opportunities.
We would also provide recommendations and future prospects for Micromax to sustain its leadership position.
External Environment Analysis
Rivalry between
Competitors
Barriers to Entry
Buyer Power
Threat of Substitutes
Supplier Power
HIGH
HIGH
LOW
MODERATE HIGH
Porters Five Forces Analysis
Strategic Evaluation of Key Success Factors
Value Innovation
Blue Ocean Strategy
Pricing Strategy
Low Pricing
Distribution Strategy
Extensive and Efficient
Marketing Strategy
Cricket and Youth Segment
Value Innovation: Blue Ocean Strategy
Value Innovation
Blue Ocean Strategy
Pricing Strategy
Low Pricing
Distribution Strategy
Extensive and Efficient
Marketing Strategy
Cricket and Youth Segment
Value Innovation
Increasing the battery size Extremely suitable for areas in India suffering from erratic power supply Launch of dual SIM (GSM and CDMA)
handset Mobile phones with Qwerty keyboards in
India at very low prices
Low cost model
Introduction of high technology and android application handsets at
very low prices
Able to challenge & defeat the existing competition in India via creation of Blue Ocean within known Red Ocean market space of handsets
Blue Ocean Strategy within Red Ocean Market Space
Reduce Camera Quality
Screen Resolution Quality of Handsets body
Lifespan of the device
Create First dual SIM dual mode
active phone First womens line of
devices First Universal Remote
Control Phone
Raise Battery size for more
backup Marketing Budget Advanced gesture
controlled features
Eliminate R & D Expenses
Credit-line policy
A New Value Curve
4-Actions Framework of Blue Ocean Strategy
Low to Medium range basic
handsets
Low to Medium range
Smartphones
Low income consumers
Youth
Professionals
Replacing bigger
players like
Samsung, Nokia
from the low-end
phone market
Segmentation Targeting Positioning
Strengths
Innovative Culture
Procing Power
Brand Name
Cost Advantages
Weaknesses
Online Presence
Tarnished Reputation
Customer Service
Less global presence
Opportunities
New Products and Services
Competitive Low-end Phones Market
New and Emerging Markets
International Expansion
Threats
Bad Economy
International Competition
Substitute Products
Political Risks
SWOT
Strategic Analysis of Micromax
ANSOFFs Matrix
Pricing Strategy: Low Pricing
Value Innovation
Blue Ocean Strategy
Pricing Strategy
Low Pricing
Distribution Strategy
Extensive and Efficient
Marketing Strategy
Cricket and Youth Segment
Micromax accounted for 22% of India's smartphone shipments in 3 months to Dec14
Samsung has only 20 percent market share with a huge drop in recent times.
Micromax flagship line of products like the Canvas Nitro and Canvas Hue has very effectively targeted at the INR9,000 to INR12,000 segment
Samsung could not match the competition in this segment as its phones had very limited features unlike Micromax
Micromax utilized Price-sensitivity of the market in its pricing strategy to provide Better features at very low cost and the local customizations as well
Samsung failed to customize the products as it was already facing competition in higher segment from others.
Micromax has been quicker than its competitors to improve the appeal of devices
e.g., by including a wide variety of local languages on its phones to cater to local markets
The company published dozens of handsets and prompted millions of Indians to Upgrade to smartphones every month.
Samsung was unable to create such an impact and its majority sales remained limited to upper segment
Micromax deployed aggressive marketing-assault by making very popular Hollywood star Hugh Jackman and Bollywoods Akshay Kumar as the brand ambassador.
They also plowed cash into cricket sponsorship which has certainly helped it grab market share.
VS
Distribution Strategy: Extensive and Efficient
Value Innovation
Blue Ocean Strategy
Pricing Strategy
Low Pricing
Distribution Strategy
Extensive and Efficient
Marketing Strategy
Cricket and Youth Segment
Efficient Distribution Networks: Localization of Operations
Distribution Management
Dealer Management
Service Centers
Fast Cycle Stock
Efficient Distribution Networks: Localization of Operations (Cont.)
Different distribution channels for each category of products
Vendor Selection and Volume Play with quality benchmark
34 super-stockists, 450 distributors, and 55,000 retailers (3-tier)
No interaction with 500+ sub-distributors unlike Nokia and Samsung
15% margin for super-distributors against an industry average of 6-10%
150 exclusive stores called Experience Zones for the urban market
Products available in all leading mobile stores like Croma, Ezone, Reliance
Webworld, Next, Planet M, Reliance Digital, The Mobile Stores
A much higher commission of 5% to channel partners of Micromax against
1-2% offered by other players
Felicitation of local dealers for their strong and consistent performance
Time to market new products from concept to launch is about three
months compared to around 18 months for larger competitors that build a
strong portfolio for the sellers to offer
Created awareness to garner a large market share in a short span of 3-4
years
More than 400 strategically located service centers in 250 Indian cities and
one in Nepal and Sri Lanka
Tie-up with five third party owned, modular (component) service centers
exclusive to Micromax
Toll-free telephone numbers for complaint registration
Onsite service in most of Indian cities
200 Micromax touch points, which are product support engineers covering
150 Indian cities
Triple-A supply chain of Agility, Adaptability and Alignment
Aligned organizations purpose, strategy & structure for faster cycle time
Cash-only model (online bank transfer) instead of credit offered by rivals
Minimum working capital, boosting return on capital employed
Supplied to distributors regularly (every 3 days) to keep inventories low
No dead inventory, no need for periodic schemes or price protection
Shorter shelf life gave sellers peace of mind that bought items are saleable
More effort from the sellers to ensure that each item is sold
Distribution Management Strategy Dealer Management Strategy
Faster Cycle Stock Service Centers
Marketing Strategy: Cricket and Youth Segment
Value Innovation
Blue Ocean Strategy
Pricing Strategy
Low Pricing
Distribution Strategy
Extensive and Efficient
Marketing Strategy
Cricket and Youth Segment
A tighter product portfolio
Concentrating on just a few key products
Focusing its marketing initiatives only on 4 strategically chosen model out of the 30 odd models
Helped to create better connect with the customer
For e.g. Canvas model
Getting rid of the Low-Cost, Low-Quality tag
Perception of a low quality Chinese brand because of a manufacturing unit in China
Though Micromax was aimed at being affordable, it never compromised on quality
A bit of skepticism towards an Indian brand by consumer used to global brands was understandable
Brought on board Hollywood star Hugh Jackman as their brand ambassador late in 2013
To talk to a new set of mature audience we needed something different
Targeting big ticket events
Mostly into dance music and rock because of the huge buzz here
These tie-ups are expensive but it gives Micromax visibility and legitimacy
Target audience of all these events is usually the youth, which fits with Micromaxs main user base
Cricket series like the 2007 India-Pakistan series, the Asia Cup
Music sponsorships included big profile events like Sunburn Goa 2012
Award shows like Brit awards, MTV awards, etc.
Consistency of messaging
Create a connection with the customer
The marketing team knows the major product launches months down the line and a marketing strategy is created taking this into account
Slogan: Canvas HD Colors can come alive Canvas 3D Entertainment can come alive,
Marketing Strategy
Marketing Strategy: 4-Pronged
Occasion based launch
Micromax launched Bling2 on the occasion of Mothers Day
It twinkles, blended well with the brand ambassador
MAd A94 serving the business ecosystem
Launched MAd A94, which comes pre-loaded with Micromax Mad app which will pay people money for watching advertisements
Customer: People who love watching ads
Other Brands: High engagement communication channel for the brands to break away from the clutter
Telecom Companies: Increasing the ARPU (Average revenue per user), and contributing to the overall profitability
New Punch Logo
Punch logo is a true reflection of the Micromax brand which is young, innovative, dynamic, bold, extrovert and fun
To highlight that customer feedbacks are valued by Micromax
Targeted around 150 colleges and design schools over a span of 2 months and got around 2500 entries by more than 1500 participants from across the globe
Innovative Marketing Initiatives
Africa has a market for mobile handsets similar to India. Consumers of Africa
have similar purchasing power
Africa emerged as one of the fastest growing markets in mobile handset.
About 90% of all phones in Africa are mobile phones
Market for low cost handset with average expected handset cost lying
between $15-20
Mobile networks are cheaper and faster to establish
Wide use of mobile phone technology for banking transactions like depositing
and transferring money
From Local to Global Markets
Transform the company from being a devices company to services company with the advent of the Internet
Aim is at offering devices that can be customised by the buyer and that offer a bunch of Internet-based services to customers
Check threat from rapidly expanding Chinese handset makers such as Lenovo, Gionee and Xiaomi
Existing smartphone is based on stock Android system
Transform through the push and the pull as Spectrum is so expensive
Possibility of cannibalization of parent brand
Introducing new brand shows weak parent
brand
Potential to grow sales rapidly and low cost of distribution resulting in saving of
15 to 20 per cent of distribution cost
Growth of e-commerce
Flash sales also get a lot of attention on social media
Advantages of selling online-only Possible downside
Insights from Yu Televentures A Subsidiary of Micromax
Recommendations
Explore alternate revenue streams by transforming into a services
company rather than just a mobile phone vendor
Feb 15: Bought a "significant minority stake" in a local analytics company
and is close to investing in a Silicon Valley-based startup
We propose that Micromax should invest in and incubate startups that will
help it in leveraging and assimilating their capabilities
These tech-based startups will offer granular analytical capability of
consumer data usage and consumer behavior
It will provide Micromax a competitive edge to differentiate itself in the
crowded and fastest growing smartphone market of the world
2014: Micromax, Aircel and MediaTek partnered over a deal with
Micromax launching devices with MediaTek processors and Aircel data
plans on offer
But Samsung also entered the cut throat ultra low cost smartphone
segment dominated by Micromax by using MediaTek chipsets
To sustain its competitive edge, Micromax needs to enter into alliances
with hardware, software and design firms
It needs to improve on its design in order to foray into the international
market where it has to face the heat from low-cost models from Gionee
and ZTE
This initiative launched to encourage manufacturing in India has led to
Samsung and Sony setting up their manufacturing units in India
Micromax is also setting up a Rs.500 crore manufacturing plant in
Rajashtans Alwar district
It should exploit this opportunity that will provide it a host of benefits for
setting up manufacturing and a Made in India label to all its devices
Even Micromax acknowledges, to some extent, that its after-sales service
lags that of global brands
Many promises from the company about changes in this system have not
translated into action
The lackadaisical attitude will not work in international markets where
regulations and consumer vigilance is much more active
Transformation into a Services Company Partnerships, Alliances and Acquisitions
After Sales Service Make in India Opportunity
References
http://www.integraluniversity.ac.in/12052010/irjm_paper6_dec2012.pdf
http://articles.economictimes.indiatimes.com/2015-02-26/news/59541902_1_micromax-co-founder-rahul-sharma-yu-televentures-
cyanogen
http://www.thehindubusinessline.com/features/investment-world/macro-view/strategy-behind-the-screen/article4203766.ece
http://cellphonelover.com/5-reasons-micromax-india-dominating-market/
http://www.integraluniversity.ac.in/12052010/irjm_paper6_dec2012.pdf
http://www.business-standard.com/article/management/how-micromax-cracked-the-code-112101000711_1.html
http://guruprasad.net/posts/part-3-micromax-phenomenon-mediatek-chipset-revolution/
http://tech.firstpost.com/news-analysis/micromax-plant-worth-rs-500-crore-to-come-up-in-rajasthan-255604.html
http://trak.in/tags/business/2015/03/07/samsung-sony-manufacturing-india/
http://www.business-standard.com/article/companies/micromax-eyes-new-revenue-streams-services-on-radar-114090800962_1.html
http://www.tolmol.com/z/spotlight/micromax-india-mobile-brand-threatening-global-giants/
http://www.euromonitor.com/micromax-informatics-ltd-in-consumer-electronics/report
http://www3.ntu.edu.sg/eee/fyp/SuggestedFormatInterimReport.pdf
http://www.exchange4media.com/56974_how-micromax-is-dethroning-samsung-as-indias-no-1-mobile-brand.html
http://www.mbaskool.com/brandguide/mobile-handsets/449-micromax-mobiles.html
Thank You