The Smartphone Battle in India
How emerging business models are changing the way that phones are marketed and sold.
It’s incredible how things are evolving in India in terms of the mobile phone device business. Samsung is the leader but Indian brands are making great progress. New upstarts like Xiaomi are entering the market as well. In this article, I examine the different approaches that Samsung, Micromax, and Xiaomi are taking. Each has a unique approach to developing, marketing, and selling their phones.
Samsung: Brand Awareness and Retail Distribution
The traditional way that Samsung has done business is to create products in a wide variety of segments with focus on brand and differentiated features. This approach is no different in India.
Samsung’s marketing muscle is really evident in Indian cities. You’ll see ads on billboards, newspapers, TV, and on radio.
One unique approach Samsung has applied to India is using a franchisee based retail distribution network. There are over 2000 Samsung branded mini-stores throughout the country. These are the main touch points for Indian consumers to see and feel a device in real life before making a purchase.
Consumers can also explore devices in multi-branded phone stores, but they typically don’t have the selection as these “smart cafes”. Along with the retail network, Samsung relies on directly selling phones via it’s own website and through marketplaces like Flipkart and Snapdeal through resellers.
Overall, Indian consumers consider Samsung to be a premium brand — the devices typically have better build quality and unique features than offerings from Indian brands. But due to costs associated with R&D, marketing, and retail distribution, the price of Samsung phone tend to be higher as well.
Micromax: Lean Development and “Good Enough” Technology
Samsung has had strong growth in India but Indian brands like Micromax are rising fast. Micromax sources components and manufactures phones mainly in China. Instead of spending money on R&D for new components, Micromax relies on turnkey solutions provided by companies such as Mediatek.
In terms of distribution, Micromax relies on an extensive network of multi-brand mobile stores and a small number of branded outlets. The phones are also sold online in marketplaces by independent retailers. More recently, Micromax has been trying to build its brand by associating with Bollywood and Cricket mega-stars.
Overall, Micromax makes “good enough” phones that appeal to the budget conscious Indian consumer at the fraction of the cost (25-50% cheaper) of phones from premium brands such as Samsung. By focusing on large screen phones with dual-sim capabilities, they have captured a large segment of phone sales in India.
Xiaomi: Focus on Services and Sell Online
The latest player in the mobile device market in India is Xiaomi. They take a completely different approach than Samsung or Micromax in the way they create, distribute, and monetize their products.
Xiaomi designs their phones in-house and offers strong specs at very attractive prices. Their strategy is to sell high-end smartphones at close to the bill of materials. Instead of relying on hardware to make money, they monetize through software and services. This includes such things as a “theme” shop for their MIUI OS and apps for downloading content/games.
To sell phones, Xiaomi uses e-commerce exclusively. In India, they are partnering with Flipkart to enable this. Their devices are not typically available on-demand — instead they sell in batches on set dates.
Xiaomi marketing strategy is vastly different from other companies. It does not advertise on TV or in newspapers. Instead, they rely on social media marketing to drum up interest for their products.
The challenge for Xiaomi is whether it can translate success in selling phones in the same way it does in China. The advantage in China is that their company leaders are themselves considered tech celebrities. Xiaomi has also built its brand as being a design-centric alternative to its other competitors. The key will be if they can create a community in India that serve as brand ambassadors since consumers will not have as many opportunities to see the devices in real life before purchasing them.
The battle between smartphone device companies is just getting started in India. As the nation transitions from feature phones, there will be plenty of opportunities for upstarts with innovative designs and business models to gain significant market share. It will be exciting to see how the market evolves in the next 12-18 months.
If you like this article, follow me on Twitter — @thecleanmachine. I plan to write more articles about emerging markets.
