'Desi flavor' Winning Hearts

Micromax
Mobiles' co-founder Rahul Sharma claimed that Micromax has proved
its mettle because it created the 'McAloo Tikki burger' of mobile
phones. The McAloo Tikki burger was a runaway hit with Indians. The
reason, says Sharma, is because McDonald understood the 'local
flavor.' But when it came to mobile handsets, multinationals like
Nokia, Samsung, Sony and others were busy flogging products created
for a global market. It's not the same now. Till 3 years back,
60-80% of the Indian mobile market used to be buzzing with just Nokia
handsets. But, today, global players seem to be having tough
competition from local 'flavors' or better to say local brands
like Micromax, Karbonn, Techberry, Kingtech, MAXX Mobiles and many
others. And, it could happen because of increase in the number of
mobile users in rural India. According to the research done by a
Delhi based market research firm JuxtConsult; till mid 2011, the
number of mobile users in rural India went up by 219 mn as compared
to 188 mn urban mobile subscriptions. And, as a result; these local
companies too benefitted by the increasing numbers in rural India.
Unlike global brands, these local companies targeted tier-2 and -3
cities as well as villages to expand their market.

MOBILE
COS' 'MAIN' MARKET

Understanding
the
importance of rural market, Ajjay Agarwal, chairman and MD, MAXX
Mobiles says, “India is dominated by tier-2, -3 and smaller cities.
Though the metros play an important role, the growth of the mobile
phone industry is being propelled by tier-2 and -3 cities around the
country.” Even Karbonn Mobiles too started its business from tier-2
and -3 cities. Shashin Devsare, executive director, Karbonn Mobiles
says, “Karbonn Mobiles entered into the Indian market in April 2009
and was initially available in tier-2 and -3 cities through
distributors and local retailers. After establishing a strong hold in
the semi-urban market, the brand went ahead and launched the product
range in metro cities.” Arshit Pathak, MD, Kingtech Electronics
(India) says, “The consumers in the developed markets are now
shifting towards smartphones, whereas in not so developed markets,
the challenge is still to connect the unconnected through basic
feature phones. This has resulted in a focus and a strategy shift of
most of the European and American brands. The developments become
more smartphone-focused which resulted in a gap in the development of
Indian consumer-specific products. Indian and Chinese brands
identified this opportunity and focused on products, which are more
relevant to Indian consumers.” And, some of the local companies
also claim to be selling more number of handsets than international
brands. Avinash Jain, MD, Arise Mobiles says, “Indian brands have
grown faster than the international brands in the last 4 years.”
Even Pathak too believes that Indian brands connect better with the
Indian consumers than international players.

Does it mean
that international brands like Nokia and Samsung failed to understand
the needs of main Indian market, ie, rural India. Till 3-4 years
back, almost 8 out of 10 mobile users in the rural India used to have
Nokia handsets. Reason was its easy keypad function and the pricing.
But over the years, Nokia seems to be having changed its focus from
rural to the urban market. And, this space is being filled by the
local brands.

THE AGE
OF
SMARTPHONES

Yes, it's
the age of smartphones. And, where can be more competition than the
country with the maximum growth in the number of mobile users. Today,
India is having around 900 mn active mobile users, and almost every
user wants his phone to be equipped with all the latest features.
Also, it should be available at the affordable price. And, this is
where; international brands seem to face major competition from the
local brands. Till few years back, who would have thought, QWERTY
keypad could also be available in the mobile with the price tag of Rs
1,500 or Facebook and Twitter
can be used in the mobile of Rs 2,000. And, unlike local brands,
international brands like Nokia and Samsung still provide all the
features in the mobile with a price tag of more than Rs 4,000. MAXX
Mobiles, which has been one of the major beneficiaries from this
shift in the market trends, from normal to high-end phones, has seen
an enormous growth in its sale over the last 1 year.

Agarwal
says,
“The era of new-age mobile phones has seen major shifts from bar to
QWERTY to touchscreen handsets. Today, we have mobile phones that are
sleek, fit into your pockets and a stylish gadget to flaunt.”
Talking about the competition from international brands, he says,
“The competition in the mobile phone market has been intense with
the Indian handset players gaining prominence over the last couple of
years. The year2011 saw an intensified pricing war which led the MNC
brands to not only re-strategize their marketing tactics but also
develop products in the low-end
segment. Brands like MAXX Mobiles have a diverse portfolio of
handsets to suit the requirements of consumers in a 'value for
money' bracket.”

But, some of
the local brands believe that they are still too far to match the
standard of international brands in terms of quality. Arshit Pathak,
MD, Kingtech Electronics says, “The competition between indigenous
and international brands is growing each day. The Indian brands'
competitiveness pushed the international brands to offer a better
value proposition to retain customer base; while the Indian brands
have no option but to innovate and come up with technology advanced
products to acquire customers.

size="3">LOCALS'
SWELLING BASE

Today, with
around 60 mobile handsets companies marketing in India, it's not
easy for all companies to grow at a healthy rate. But besides tough
competition, these companies are not only making profitable business,
but are in a mood of expanding the business base. According to IDC's
India Quarterly Mobile Handsets Tracker, 3Q 2010; Kingtech
Electronics' brand G-Five was ranked as the second largest handset
brand in India with a marketshare of 10.6%. And, was recently ranked
as the third largest mobile phone brand in India (as per Gartner's
Report-Marketshare: Mobile Communication
Devices by Region and Country, for 3Q11). Agarwal says, “In 2011,
where other Indian and Chinese mobile handset players have witnessed
a fall in shipments, MAXX Mobiles shipments rose to 10.1%, as per Q3
CY2011 IDC's India Mobile Phone Tracker Report. MAXX Mobiles also
clocked the highest number of new product launches in the year,
introducing 52 new models in the year 2011, all in the affordable
price range of Rs 1,000 to Rs 7,000. Another Indian brand, Lava seems
to have the share of 4.5 to 4.7% shares in the Indian market. SN Rai,
co-founder and director, LAVA International says, “We have been a
late entrant in the market which has moved on to smartphones and
showing a peak growth.” He believes that within 2-3 years, the
company's growth would
go up to 10%. Also, Anil Kaushik, CEO, SICT Mobiles says, “Currently,
the company has around 1-2% of marketshare, and believes to continue
to spread its wings to newer territories every month.”

CHANNEL
PARTNERS' TAKE

In a tough
domestic market with a vast presence of old brands like Nokia and
Samsung, it's very important for local brands to strengthen their
relationships among distributors. And, over the last 2-3 years, it's
been seen that channel partners have been selling more mobiles of
local brands than internationals. Amit Shah, director, Kalpesh
Telecom, Mumbai says, “Today, an average middle-class family is
opting for an Indian mobile brand be it Lava, Micromax, iBall at
about Rs 3,000, while a person gets a similar high-end mobile to that
of the Samsung's or Motorola's at Rs 15,000 and above. Jayesh
Doshi, director of NJ Telecom, Mumbai says, “These Indian brands
are doing pretty good in the market. He says, “Indian mobile
brands are getting good values in the market because these
are designed and priced accordingly seeing the price sensitive
consumers in our country. It is not only Micromax with a huge
marketshare with all its product ranges, but also Lava mobiles
provide good services if there is a damage to the products be it
under the warranty period or not.” Even channel partners in the
state like Gujarat and Kerala too have similar comments. JB Nayar,
TeleSutra says, “There has been a huge growth in the sales of local
brands over the years.”

Speaking on
the similar line, Sidharth Chopra of MBR Communications says, “Over
the last 2-3 years, we have experienced that Indian companies have
better understanding of consumers than their
international peers. And seeing the good response, almost all the
local brands have been cutting their teeth to make their presence
across the country than just few cities. SN Rai, co-founder and
director, LAVA International says, “Currently, we have 1,000
distributors and 55,000 retailers. But we would like to expand to
1,400-1,500 and 100,000 respectively. MAXX has strengthened its
footprint in the Indian market by developing a wide distribution
network. Currently, the company has its
presence among 20,000 retailers across India through its strong
dealer distribution network supported by approximately 500 aftersales
service centers. Jain of Arise Mobiles says, “They have 450 centers
pan-India taking care of service issues. And we shall have 1,200
service outlets by April 2013.”

G-Five has
over 400 distributors and the brand is available at over 40,000
retail outlets. Pathak of Kingtech
Electronics says, “We intend to further expand the channel partner
base in the country. As we are changing our product profile by
shortly introducing 3G handsets and smartphones, we have to acquire
new set of consumers and it's important for us to be at the
organized retail format. We are also taking the LFR (large format
retail) route.”

TAKING
INDIA TO THE WORLD

Now, after
growing strongly in the Indian market, these companies are all set to
take their steps toward finding space in the international arena. In
the year 2011, while, strengthening its forte in India, MAXX Mobiles
also expanded its presence in various emerging markets globally
including, UAE, Fiji, Nepal and Bangladesh. Agarwal says,
“Reinforcing our local manufacturing capabilities will be a key
focus area for MAXX in 2012, with the set up of two additional plants
in the existing premises of Haridwar, one each dedicated to the
manufacturing of Lithium-ion battery cells and mobile phones.”
Companies like Micromax and Karbonn too are leaving no stone unturned
to swell their presence across the world.

Now, if we
believe to analysts, the major challenge for these local brands
starts in 2012. These analysts believe that these companies' real
performance will be tested over the next 2-3 years as Indian
consumers are very fragile. Moreover, the Indian market is one of the
most difficult as well as growing markets in the world.