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