The Rise of Micromax in India

"How much would a Micromax Android handset cost me?" a 60 year old man who hails from Shimla and
is very young at heart, asked me a couple of days back. "Only Rs 7,000," I replied, but inquisitively asked
him why he asked only about Micromax and nothing else!

"Because almost every household in Shimla owns at least one handset from Micromax," he said. "And it
is popular because of friendly shopkeepers who offer amazing discounts on handsets from the
company, and the promptness of service centers in solving the problems faced by Micromax handset
owners."

The above instance only underlines Micromax's phenomenal rise as a handset make in India.
In 2008, when the Indian handset market was dominated by multinational companies such as Nokia,
Samsung, LG, Sony Ericsson and Motorola, Micromax joined the party with an aim to provide mobile
users entry-level and mid-level handsets priced between Rs 1,800 and Rs 2,400. Rajesh Agarwal, a
distributor for computer hardware brands such as Dell, HP and Sony, along with his three friends
Sumeet Arora, Rahul Sharma and Vikas Jain, launched Micromax, the first Indian handset company. In
the initial phase of their journey, Micromax had confined itself to small towns and rural areas. But
within three years of its operations, Micromax has introduced more than 40 distinct mobile handset
models and established a distribution network of around 75,000 retailers across the country. It
registered a sales growth of 132.43 per cent from 1.11 million units in the quarter ended June 30, 2009
to 2.58 million units in the quarter ended March 31, 2010 and emerged as India's third-largest GSM
mobile phone vendor with a market share of 6 per cent after Nokia (62 per cent) and Samsung (8 per
cent) in 2010.

Innovations
Micromax believes that consumers in India have unique preferences with respect to mobile handsets.
Therefore, the company has strategized on innovating, designing and using the latest technologies to
develop products at affordable prices. Erratic power supply is a major problem in rural as well as urban
India, and to address this problem Micromax increased the size of the battery to 1800 mAh, as a result
of which its X1i phone lasts for 30 days on standby and that too at an affordable price of Rs 2,150. The
phone was a big success in rural India and gave the company an initial boost.
Micromax knew that if it wants to maintain momentum and challenge well established players such as
Nokia it needs to strengthen its distribution network because even after the success of initial launches
its brand recall value among customers wasn't great. So the company came up with another innovation,
this time pertaining to distribution. Micromax knew that commissions given by phone manufacturers to
their channel partners are often very low, leading to a lot of dissatisfaction. The company decided to
give around five per cent commission to each of its distribution chain partners, which rapidly led to
increase in presence and sales. After this, Micromax expanded its range of handsets in keeping with new
market demands. In 2010, it even tied up with MTV for co-branded phones to connect with potential
customers in metros.

Another way in which Micromax innovated was by launching dual SIM and dual reception (GSM and
CDMA) handsets before Nokia did. In one of its innovations, to suit the requirements and preferences of
different consumer groups, Micromax has released Android and touchscreen handsets for less than Rs
7,000 each. Micromax also has mobile phones with Qwerty keyboards, utility, 3G, gaming and
multimedia handsets, phones that work as universal remote controls etc.

Micromax sells mobile handsets that access networks on CDMA and GSM formats. In addition to
different network access formats, its mobile handsets reflect various combinations of distinct features
and functionalities, including weight, dimension, memory type and capacity, battery type, battery life
and display type, as well as camera, video, GPS, Wifi, 2G or 3G capability, sound, music, radio, Bluetooth
and messaging capabilities.

Supply Chain & Product Development

Micromax used to source their handsets from China, ensuring low manufacturing cost. It tied up with
world-class manufacturers such as FoxConn, who has experience in manufacturing for Apple and
Samsung. This ensured that the quality of the handsets is maintained at global standard. They have
made their distribution channel very efficient in such a way that whereas a big international brand
typically requires 18 months to launch a product, Micromax can do that in a month or two. It has
achieved this by performing a thorough analysis of the needs of their customers and identification of
their markets. It also partnered with digital payments company TranServ and global payments
technology major Visa to offer the next generation of payment solutions.

Customer Service
The most important thing that increases customer loyalty is it’s after sales service, and to achieve this
Micromax has more than 370 strategically located sales service centres in India, and also one each in
Nepal and Sri Lanka. In addition to the service centres, Micromax also has tie ups with five third party
owned, modular (component) service centres which are exclusive to Micromax and provide a full suite
of after sales services excluding chipset and printed circuit board (PCB) replacement. Sharma said, "We
have also established a service factory in New Delhi, which provides a comprehensive range of services,
including chipset and PCB replacement services. The service factory supports our modular (component)
service centres and authorised service centres (ASCs) by supplying the necessary inventory and
supporting technical teams in order to reduce turnaround time."

Restoring Volume Leadership Back

Homegrown handset major Micromax is making an aggressive comeback in the Indian market, aiming to
get its “volume leadership” back as it fends off Chinese rivals like Vivo, Oppo and Xiaomi. The company
is focussing on strengthening its position in the Rs 9,000-15,000 category and aims to garner 10 per cent
share in the category. There were players that had flooded the market with hoardings and offering over
the top margins to retailers.

Under the realigned product roadmap, Micromax is focused on key features like camera, screen, battery
and security and launched a slew of devices that showcase Micromax’s “focus on innovation at the right
price”. Sharma said the efforts have paid off with the company registering sales of 28.3 lakh devices in
July. At the end of December 2016 quarter, Micromax had 8.8 per cent share of the smartphone market
and ranked third after Samsung and Lenovo.

In the March and June 2017 quarters, Micromax did not feature in the top 5 smartphone players tally. A
big area of focus for Micromax was the Rs 9,000- 15,000 category. This segment accounted for 21 per
cent of the market and it wanted to capture 10 per cent share of this category in the next six months. In
July 2017, Micromax launched its new device Canvas Infinity, priced at Rs 9,999. The device features
18:9 display smartphone that was/is available in high-end devices like Samsung S8 and LG G6. This is
one of its innovations that it worked on. 18:9 ensured that users get more display space that is useful
when they are playing games or watching videos, while ensuring that the handset can be held
comfortably.
Source: Compiled from various media
Enumerate the factors which contributed for branding, competitive success and turnaround of
Micromax. Analyse the linkages between Operations and other functions (viz., Marketing, Sales,
Finance, etc.) that Micromax leveraged to build and grow fast? What should Micromax do to stay
competitive in future?