CASE STUDY: How Micromax created a niche for itself and became number #2

smartphone vendor in India?

What you will find in this Case Study?

1) About Micromax
2) How Micromax Started?
3) Reason for the success of the brand
4) Marketing Strategy
5) Results
About the Company
Micromax is an Indian consumer electronics company headquartered in Gurgaon. The
company was established as an IT software company operating in the embedded
devices domain; it later entered the mobile handset business. By 2010, it was one of the
largest domestic companies making handsets in the low-cost feature phone segment in
India. As of Q3 2014, Micromax is the tenth largest smartphone vendor in the world.

Micromax is currently the 2nd largest smartphone company in India. Micromax is a

brand which is close to the heart of the youth, and celebrates the vibrancies of life and
empowerment.
The Idea
In August 2007, in the powerless village of Behrampur in West Bengal, Mr Rahul
Sharma saw an Airtel PCO being power-driven by a truck battery. During night hour, the
PCO owner would drag the battery 12 km to an adjoining village on his cycle, charge it
there overnight, and drag it back in the morning to Behrampur.This was the source of
inspiration for its first product when Micromax decided to diversify from PCO devices
into the business of mobile handsets in late 2007. The company designed a battery that
could last for 30 days on a single charge and give 17 hours of talk-time. This was
implemented through vendors in China and Taiwan to whom Micromax asked to
manufacture 10,000 handsets with these battery specs. Price Rs 2, 249, X1i, was an
immediate hit in rural India, and Micromaxs handset business was on its way.
The four founders of Micromax waited for eight years to come together to do business.
After college, Mr Jain relocated to the US and joined GE, Mr Arora linked with Blue Star
and Mr Sharma moved to an auto components company Bundy Engineering. In 1999,
the trio quit their jobs to join Mr Agarwal. They set up Micromax Technologies, an IT
education company dealing in e-commerce and embedded technologies.Business
achieved a height in 2007, with sales of 250,000 devices. Then, the mobile revolution
took over. Overnight, again, Micromax faced the threat of disappearance. But with its
superb management strategy, Micromax converted the threat into an opportunity. It
focused highly on product innovation for the low-end, price-conscious user. So, it went
rural and it worked. Mr Sharma says: Customers were willing to pay a premium of
Rs200 for the X1i. Then, instead of manufacturing itself, Micromax on-demand
collected its handsets from 12 factories in China, South Korea and Taiwan. Micromax
has invested Rs 100+ crores to set up a manufacturing plant in Baddi, Himachal
Pradesh, to ensure its outsourcing model does not cause supply-side uncertainties.

Reasons for the success of the brand

In the second quarter of 2014, Micromax became the top seller in India leaving
Samsung and Nokia behind. So what marketing strategies did Micromax followed?

Clear strategy: Delivering the right value at the right price seems to be the core value
of the companys strategy. It did it by working over Ps of marketing and doing this it has
reached to 130,000 retail outlets covering 560 districts across India.

The right funders: On 20 September 2010, Micromax announced that Sequoia Capital
and Sandstone Capital Llc had taken minority stakes in the company, following which
Mohit Bhatnagar, managing director of Sequoia Capital, joined the companys board.
Madison India Capital also participated in the investment round, which totaled Rs 200
crore ($43million). Earlier Micromax had raised $45 million in January 2010 from TA
Associates. Micromax has expanded its reach in Indian homes through its various
products like tablet, LED Tv, data card and mainly the mobile phones. Micromax sells
around 2.3 million (23 lakh) Mobility Devices every month, with a presence in more than
560 districts through 1, 30,000 retail outlets in India.
Marketing Strategy of Micromax
Sponsoring Indian Cricket Matches: Micromax knew that Indian people love cricket
more than anything else. So they took the title from Hero Honda and sponsored a lot of
series. With this strategy they reached in the heart of millions of customers. In 2014-15
they paid 20 million Indian rupees to BCCI per match. So they know where and why
they are investing that much amount.
Reach to Indian market: Soon after launching their own mobile handsets in the market
they started opening their own outlets all across Indian cities. They opened outlets and
service centers more aggressively than any other mobile company in India even beating
Nokia. Through this they become a household name in all cities and quickly made its
own identity.
Right product strategy: Micromax knows what Indians want. Sasta and Tikau. Who
can understand this line more than an Indian. And this is what Micromax did. It launched
Right product at Right time at Right price. Of course their products quality is lesser than
that of Nokia and Samsung but the product lives of all companies are same and no one
uses a smartphone for more than a year or two.

Promotion strategy: To further increase its visibility, Micromax blasted into the market
by advertising through outdoor, online, radio, exchange schemes and promotions via
social cause.

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.

Distribution strategy: 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. 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.

Customer acquisition & retention: Micromax provided better after-sales service and
an extended warranty of 2 years; it gained the trust of the customer. Exchange offers
played a key role in customer retention.

Use of Social Media: And above all, use of social media made it boss. Engaging with
its fans made them trustworthy. Micromax collects feedback from its hardcore users and
implements it in their next release whichever is required. Currently, Micromax has over
5.15 million fans over Facebook. The huge success of the brand has been a result of
the promotional activities run over the social media platforms. Twitter page has 121K
followers that remain active to get superb deals and offers through this page. New
launching is promoted via YouTube which currently has 31335 subscribers. Google+
also looks to grab the opportunity of digital marketing with a follower base of 36933.
Micromax, Indias No. 2 smartphone vendor, spends about 10% of its marketing budget
on digital media until last year. Now, more than a third of it goes towards online
campaigns.
Digital marketing is more personalized, which allows direct interaction between the
brand and the consumer, and the response is easily measurable, unlike those on mass
mediums like TV, radio or print. Digital marketing offers data that industry experts say
put them in a better position to make informed decisions.
Shubhajit Sen, chief marketing officer at Micromax Informatics says We try to find out
what people are talking today and if there is a scope or an insight to convert it into
marketing and advertising campaign. The company spends about 2% of its sales on
advertising and marketing. In 2014-15, it posted sales of over Rs 10,000 crore.
 #CANGIFTHAPPINESS Campaign on Twitter: Micromax at the time of Christmas
launched a campaign on Twitter #CANGIFTHAPPINESS and with every tweet made
using #CANGIFTHAPPINESS they donated Rs.1 to CRY, India, a NGO to Support
Child Rights. The campaign not only resulted into a great support for CRY but bestowed
the mobile company with some great gifts like more impressions, more mentions, more
followers and so on.

More than 11,600 people participated in the campaign that generated 29.5 million
impressions during the Christmas week. 2, 38,332 tweets were posted that made the
donation amount to reach INR 4, 69,664. Even celebrities and influencers joined this
campaign for social cause and more than 2 lakh mentions were generated.

Results
All the mentioned strategies helped Micromax in increasing its market share and it
penetrated deeper in the urban markets. It became the largest GSM mobile phone
vendor in India leaving Nokia and Samsung behind. However, currently Samsung has
again dominated the android market but Micromax with its budget smartphones has
been able to hold on a share of 17 per cent in the Indian smartphone market. It sells
more than 1 million mobiles every month. By offering a product line ranging from mobile
phones to LED televisions, tablets and data cards, Micromax became the largest Indian
mobile company that almost cannibalized the market leader Nokia. Earlier in Q2 2014,
Micromax overtook Samsung to become the largest mobile phone supplier in India.