Study of Marketing Strategies adopted by Micromax Mobiles

Submitted by Name Umang Tibrewal Zehra Ladiwala Harsh Vardhan Mohta Nishad Nevgi Snehal Punjani Anish Rai Roll. No. 20 24 30 33 35 37

Table of Contents
1. Introduction ..................................................................................................................................................... 3 1.1 Company Profile........................................................................................................................................ 3 1.2 Strategies Adopted..................................................................................................................................... 4 1.3 Market Segmentation................................................................................................................................. 4 1.4 SWOT Analysis of Micromax Mobiles ..................................................................................................... 5 2. Promotional Campaigns of Micromax Mobiles .............................................................................................. 6 2.1 Khatron Ke Khiladi ................................................................................................................................... 6 2.2 Cricket A Religion in India .................................................................................................................... 6 2.3 Micromax & MTV .................................................................................................................................... 7 2.4 International Indian Film Academy (IIFA) ............................................................................................... 7 2.5 Micromax & MTNL/BSNL ....................................................................................................................... 8 2.6 Advertisements used by Micromax mobiles ............................................................................................. 8 2.6.1 Advertisements highlighting product features .................................................................................... 9 2.6.2 Other Ad Campaigns .......................................................................................................................... 9 2.7 Brand Ambassadors ................................................................................................................................. 10 2.8 Social Media Marketing .......................................................................................................................... 11 3. Product Mix ................................................................................................................................................... 12 4. Price ............................................................................................................................................................... 13 5. Survey Analysis ............................................................................................................................................. 14 6. References ..................................................................................................................................................... 15

Table of Figures and Illustrations

Figure 1: Market share of various handset manufacturers in India in 2009 ........................................................ 3 Figure 2: Micromax 'Fly to Brazil Teaser' ........................................................................................................... 6 Figure 3: Aspirational campaign teaser by Micromax ........................................................................................ 7 Figure 4: Micromax Bling promoting the association of Micromax and IIFA ................................................... 8 Figure 5: Micromax ads during IPL 2010 ........................................................................................................... 9 Figure 6: 'We are sorry' ad by Micromax - reinforcing its tagline: Nothing Like it .......................................... 10 Figure 7: Micromax's Brand Ambassadors; Twinkle Khanna & Akshay Kumar ............................................. 10 Figure 8: People's view on why they use Micromax ......................................................................................... 14

1. Introduction
The mobile phone market in India is worth 130 million handsets annually. While the big boys like Nokia, Samsung, LG, Motorola and Sony Ericsson make up for 70% share, the market has of late seen a slew of domestic firms such as Micromax, Karbonn and Intex making large inroads and new established brands like Videocon and Onida entering the field. A look at the industry profile helps us understand the market better.

NOKIA 54.1% LG 6.4% SAMSUNG 9.7% MOTOROLA 5.9% MICROMAX 4.8% SONY 5.8% OTHERS 13.3%

Courtesy: IDC report on growth of mobile sales in India, 2009

Figure 1: Market share of various handset manufacturers in India in 2009

Comparative Analysis shows that the market shares of Nokia and LG fell from the years 2008 to 2009 while that of Samsung rose only marginally. This can be attributed to the growth of the local manufacturers (18.1% of the market share) which rose from 5% in 2008 to 28% in 2009. The most prominent local manufacturer with a market share of 4.8% is Micromax. The Business Line in Feb 2010 reported Micromax as Indias third-largest GSM mobile phone vendor with a market share of 6 percent after Nokia (62 percent) and Samsung (8 percent), according to research firm IDC. It sells anywhere from 7,00,000 to one million mobile phones every month estimated at about `1,500 crore annually.

1.1 Company Profile

Conceptualised by Vikas Jain, Rahul Sharma, Rajesh Agarwal and Sumeet Kumar, Micromax Informatics Private Ltd started operations in 1991 as an embedded software design firm. Launched at a time when the local Indian mobile-phone market was still in the nascent stage, Micromax mobiles cashed into this aspect and filled in the gaps left open by the International giants like Nokia and LG. Today, Micromax is one of the leading Indian mobile handset companies with 23 domestic offices across the country and international offices in Hong Kong, USA, Dubai & Nepal and a presence in more than 40,000 stores across the country with plans for further expansion.

The Micromax ideology stems from its rooted belief in Innovation and delivering nothing short of the best. With a futuristic vision and an exhaustive R&D at its helm, it has successfully generated innovative technologies that have revolutionised the telecom consumer space.

1.2 Strategies Adopted

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 smartphones at almost half the prices of other handset manufacturers.

1.3 Market Segmentation

Identification of the correct market segment is an important step to enter any market. The first target segment that Micromax identified was the rural market. Micromax launched its first phone in the rural market with a very unique USP - 30 days battery standby time. The brand was launched from a consumer insight that most of the rural households do not get enough electricity to recharge phones on a daily basis. With their phone prices ranging between ` 1,800 and ` 2,400 the company confined itself to small towns and rural areas in the first 12-18 months and had 80% sales in the rural areas. Youth in the urban areas is another target segment. The young today are price sensitive and Micromaxs innovative features and affordable price range has helped it capture this market. They have leveraged the tie-ups with MTV and sponsored bollywood awards and cricket tournaments to create awareness in the metros. On an International front they are currently focusing on three strategic markets: SAARC countries, Middle East and Latin America. SAARC countries like Nepal, Bangladesh etc. are quite similar in terms of consumer needs and market challenges hence it becomes an immediate expansion strategy.

1.4 SWOT Analysis of Micromax Mobiles

Strengths - Innovative products and features - Affordable prices - Strong presence in rural markets - Effective promotional campaigns - Strategic alliances with IPL/MTV, etc.

Weakness - Poor after sales service - Weak brand image in urban areas - Skewed product mix of low cost phones - Perception of low-quality Chinese brand

SWOT
Threats - Increasing competition from local and international players - Replication of business model by competitors Opportunities - Increase penetration in urban markets - Entry into international markets - Foray into the sub ` 1400 price segment

2. Promotional Campaigns of Micromax Mobiles

Promotion of the product through sales, advertising, public relations & direct marketing is a very important aspect of the marketing mix. Thus, an integrated communication strategy requires choosing communication options that reinforce and complement each other. Micromax Mobiles has very effectively used television, print, events and web media of advertising to communicate with the customers.

2.1 Khatron Ke Khiladi

Your new Micromax mobile can take you places...Brazil for instance!

Figure 2: Micromax 'Fly to Brazil Teaser'

After the huge success of Fear Factors Khatron ke Khiladi Seasons 1 and 2, Micromax mobiles hopped onto the bandwagon as the Associate Sponsor for the 3rd Season hosted by the Bollywood actress Priyanka Chopra. They have launched a Fly to Brazil contest where, in order to participate a customer needs to send an SMS after purchasing a new Micromax handset for an all expense paid trip to Brazil and a chance to hang out with the celebrity contestants of the show. This strategy capitalises on the trend of sponsoring TV shows hosted by celebrities and focuses on tapping the public relations and events to promote its product.

2.2 Cricket A Religion in India

Gaining brand visibility through sports sponsorship is slowly becoming the new marketing mantra for Micromax. The cricketing platform provides them with an opportunity to relate with their customers. Cricket in India cuts across all age groups, religion and topography, hence the choice for partnership. Cricket has helped to create a brand recall among the customers. They have sponsored a number of Cricket Events in India like IPL 2010, India-Sri Lanka-Zimbabwe One-Day/Test series and the Asia Cup 2010. Its major sales went up during the IPL where it sponsored the Time Out Section showing the Micromax mobile. Micromax by sponsoring enjoyed a significant logo presence and exclusive branding rights at key strategic locations of the stadium, as well as mass visibility on television. At a time when all big brands are sponsoring one or two cricket matches, Micromax has become the trendsetter by sponsoring 304 hours of thrilling cricket action. The company has focused on the element of innovation to distinguish itself from the race of cricket sponsorships.

2.3 Micromax & MTV

The deal between Micromax and the multimedia youth brand is a first of its kind in the Indian mobile market. MTV is a brand that is synonymous with the youth and that continues to define and lead the young generation. The first mobile phone to hit the market under this agreement was the Micromax MTV X360. The phone was unveiled by MTV VJs Rannvijay and Anusha. The device is a music oriented handset powered by 3D sound surround by Yamaha and Wolfson. Micromax thus aims to capture the youth market which is passionate about music and identify with the MTV brand.

2.4 International Indian Film Academy (IIFA)

Figure 3: Aspirational campaign teaser by Micromax

IIFA is synonymous with the best in the Indian entertainment industry. Micromax is the sponsor of the prestigious IIFA awards 2010. This was done with the aim to capture the gaze of potential consumers and to enrich the brand visibility in the Sri Lankan & the global market. To leverage upon the association of Micromax with the IIFA, it had come up with a promo developed by the ad agency Lowe Lintas in which 6 lucky people, who bought the Micromax mobiles, would get to fly to Sri Lanka for the IIFA Awards and be treated like a celebrity. The advertising campaigns supplementing this promotion played on the human aspiration of being treated like a star. Moreover, Micromax also unveiled an all exclusive IIFA edition of Micromax Q55 Bling mobile phone.

Figure 4: Micromax Bling promoting the association of Micromax and IIFA

2.5 Micromax & MTNL/BSNL

Micromax H360 is the cheapest 3G smartphone in the Indian market. This handset has been launched by MTNL in collaboration with Micromax. It would be available with the MTNL 3G Jadoo service available in Delhi and Mumbai cities. The price of this new smartphone is set at ` 5500 which is much lower than comparable handsets from rival companies. It has also launched its 3G datacards in collaboration with BSNL.

2.6 Advertisements used by Micromax mobiles

Micromax commercials talk about the product and their features. As per Vikas Jain, Co-Founder and Business Director of Micromax the whole idea is that after seeing the commercial the consumer should be tempted to visit a retail outlet to check out the product. While the prices of Micromax mobiles are lower than its competitors price, it is not communicated in the marketing plan. It is rather perceived as the final delight that the consumer will get.

2.6.1 Advertisements highlighting product features

Beep off TV commercial highlighting the usage of a micromax mobile phone as a TV remote Heavy metal of Music TV commercial highlighting powerful amplifiers sponsored by Yamaha Chalo Shehar TV Commercial highlighting the 30 day battery life Gravity TV commercial highlighting the dual CDMA/GSM reception
2.6.2 Other Ad Campaigns

Less Tamasha more cricket: These Micromax ads took a dig at the IPL parties. This campaign coupled with their cricket sponsorships really strengthened the brand awareness which translated into more sales.

Figure 5: Micromax ads during IPL 2010

We are really sorry: The latest Micromax ads capitalise on the addiction of the youth to Social Networking sites and movies. A recent ad shows a young boy wreaking unintentional havoc in a mall while watching a movie on his phone while another ad shows a youth nearly missing his death while surfing Facebook.

Figure 6: 'We are sorry' ad by Micromax - reinforcing its tagline: Nothing Like it

This campaign was also perceived by the advertising fraternity as an indirect way of addressing the competition for eating into their market share in a tongue in cheek manner.

2.7 Brand Ambassadors

Micromax mobiles did not have a brand ambassador until 2010. The brand looked at attaining a more active marketing communication. Micromax mobiles which primarily targets the youth signed on Akshay Kumar as its brand endorser in March 2010. They also signed in Twinkle Khanna to promote the Micromax Bling phone. Since Akshay Kumar was already on board, it strengthened the connection. Another factor was that she had been away from the media since the last 4 years so her presence brought the clutter breaking factor.

Figure 7: Micromax's Brand Ambassadors; Twinkle Khanna & Akshay Kumar

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2.8 Social Media Marketing

Micromax is quite active on Social Networking sites like Facebook and Twitter. All their latest promotions, commercials and news are posted on both sites. For example, the current Facebook page of Micromax Mobiles boasting of more than 4000 fans talks about the Micromax Fly to Brazil contest. This helps the customers to easily connect with the brand and also brings in a feature of convenience that your phone is just a click away.

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3. Product Mix
Micromaxs most popular models Model Features Price

Q3 & Q7

WiFi and QWERTY keypad with trackball. Dual SIM support.

` 3700 / 4700

Q55 Bling

Impressive cosmetic box design. All general smart phone features.

` 5095

G4 Gamolution

Inbuilt gaming console and motion sensors. Expandable memory.

` 2885

X1i

30 day battery back-up. Music and video playing.

` 1680

X235

Infrared remote control Dual SIM support

` 2596

On the product side, Micromax has a wide range of phones with different features and thus offering variety to the customers. Micromax has been able to successfully identify the needs of customers and design products appropriately. The X1i, 30 day battery back-up phone catered to the rural areas plagued with electricity shortages. Also, Micromax realized that intense competition between telecom service providers forced customers to maintain two connections, and hence it launched a wide range of dual-SIM phones, which forms almost 85% of its product portfolio as compared to market leader Nokia which introduced one only recently. Innovation in its products has been paramount and this is demonstrated by new features like remote control and motion sensor enabled handsets.

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4. Price
The company has its manufacturing facilities in China and Taiwan, where the production costs are low, and operational efficiencies in its supply chain are high, so Micromax handsets are available at almost half the price of Nokia handsets. As India is a price sensitive market, and most of Micromax phones cost less than ` 5000, the price has been a major driving point in its growth story. On the distribution side, it offers its distributors a margin of 5% as compared to 2% of Nokia, but on the condition of no credit. Thus, it has incentivized the distributors and dealers to stock Micromax.

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5. Survey Analysis
Based on our survey among dealers of Micromax Mobiles and customers, we have come up with the following observations: Price is the most attractive feature. A Micromax handset offers the same features which a Nokia smartphone provides, but at half the price. 54% of the respondents used different SIM cards for incoming and outgoing. They have rated Dual SIM technology as the most sought after feature. Micromaxs marketing blitz in IPL and Asia Cup helped increase its brand awareness significantly. 65% of the respondents had heard about the brand for the first time only during the IPL. 85% of the respondents who owned a Micromax handset were satisfied with the performance of the phone and perceived it as a value for money proposition. Micromax has about 20% share in the sale of handsets among the dealers whom we interacted with. Maintaining quality is another area of concern. Micromax dealers are facing with an average of 5% complaints. About 12% of the respondents perceived Micromax as a substandard handset company supplying cheap Chinese products. Providing good after-sales service is the biggest challenge which Micromax faces. 18% of the respondents were unhappy with the efficiency and the long waiting period in the service centres. Also, customers were unhappy with the small number of service centres.

Respondent survey- Why Micromax?

9% 3% 2%

2% Price Features Brand Value Quality 61% Design Others

23%

Figure 8: People's view on why they use Micromax

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6. References
Saxena, Rajan (2010) Marketing Management. 4th Edition, Tata McGraw Hill Education Pvt. Ltd. Kotler, Philip et al (2009) Marketing Management: A South Asian perspective. 13th Edition, Dorling Kindersley India Pvt. Ltd. (Pearson Education) Dharmakumar, Rohin (2010) Micromax Mobile Advantage, FORBES India http://business.in.com/article/work-in-progress/micromax-mobile-advantage/10472/1 www.micromaxinfo.com https://www.facebook.com/micromaxinfo?ref=search#!/micromaxinfo?v=wall&ref=search http://clientcomplain.com/ http://consumercomplaints.com/ http://www.unwireindia.com/

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