COMPETITIVE STRATEGY
MICROMAX –THE INDIAN INNOVATOR Can Micromax make the leap from Indian to global brand?
Faculty Guide: Naveen Coomar
SUBMITTED BY: ANKUR MAKHIJA ROLL NO .55 IIFT IIFT PT 12-1 12-15 5
What is Competitive Competitive Strategy? Strategy? Competitive Competitive Strategy is defined as the long term plan of a particular company in order to gain competitive advantage over its competitors in the industry. It is aimed at creating defensive position in an industry and generating a superior ROI (Return on Investment). Such type of strategies strategies plays plays a very important important role when when industry industry is very competitive competitive and consumers are provided with almost similar products. Before devising a competitive strategy, one needs to evaluate all strengths, weaknesses, opportunities, threats in the industry and then go ahead which would give one a competitive advantage. According According to Michael Porter , competitive strategy is devised into 4 types:
1. Cost Leadership
Here, the objective of the firm is to become the lowest cost producer in the industry and is achieved by producing in large scale which enables the firm to attain economies of scale. High capacity utilization, good bargaining power, high technology implementation are some of factors necessary to achieve cost leadership. E.g. Micromax mobile phones
2. Differentiation leadership Under this strategy, firm maintains unique features of its products in the market thus creating a differentiating factor. With this differentiation leadership, firms target to achieve market leadership. And firms charge a premium price for the products (due to high value added features) Superior brand and quality, major distribution channels, consistent promotional support etc. are the attributes of such products. E.g. BMW, Apple 3. Cost focus Under this strategy, firm concentrates on specific market segments and keeps its products low priced in those segments. Such strategy helps firm to satisfy sufficient consumers and gain popularity. E.g. Sonata watches concentrates on lower segment customers. 4. Differentiation focus Under this strategy, firm aims to differentiate itself from one or two competitors, again in specific segments only. This type of differentiation is made to meet demands of border customers who refrain from purchasing competitors products only due to missing of small features. It is a clear niche marketing strategy. E.g. Titan watches concentrates on premium segment which includes jewels in its watches. Hence without following anyone of above mentioned competitive strategies, it becomes very difficult for firms to sustain in competitive industry.
MICROMAX – AN INTRODUCTION Micromax Mobiles is one of the leading mobile companies in the World today. According to Strategy Analytics Global Handset vendor market share report, it is the 12th largest mobile brand in the World with a global market share of 1% and close to 8% market share in India. With an in depth understanding of rapidly changing consumer preferences coupled with the use of advanced technologies, Micromax has been able to differentiate itself from the competitors through innovation and design. The brand took on the leaders in the category with specific products that addressed different customer needs. The company has focused their efforts towards creating lifeenhancing mobile phone solutions and wireless technologies that cater to the increasingly evolving needs of mobile users in India. Micromaxs realization that the rural market is a large part of the Indian market made it evolve a strategy for reaching the villages. It also offered products at very low prices, which would suit the rural pocket, thus providing value for money (VFM) products for the price sensitive rural customers. It also focused on features that addressed the specific challenges facing those living in the rural areas. Micromax calls its strategy ‘sell deep and sell more. Today, Micromax has presence across India and global presence in Bangladesh, Nepal, Sri-Lanka, Maldives, UAE, Kingdom of Saudi Arabia, Kuwait, Qatar, Oman, Afghanistan and Brazil. Micromax sells around 1.3 million mobiles handsets every month, with a presence in more than 500 districts through 100,000 retail outlets in India. This helps the company achieve economy of scale and keep operational costs low; thus achieving its objective of providing essentially value for money (VFM) products.
HOW MICROMAX FOLLOWS COMPETITIVE STRATEGIES? Micromax targets the mass market with its products, but combines this broad scope with a differentiation strategy based on design, branding and user experience that enables it to reach the Indian common man.
Cost leadership Strategy This strategy involves the firm winning market share by appealing to cost-conscious or price-sensitive customers. This is achieved by having the lowest prices in the target market segment, or at least the lowest price to value ratio (price compared to what customers receive). To succeed at offering the lowest price while still achieving profitability and a high return on investment, the firm must be able to operate at a lower cost than its rivals. There are three main ways to achieve this.
The first approach is achieving a high asset turnover. These approaches mean fixed costs are spread over a larger number of units of the product or service, resulting in a lower unit cost. Higher levels of output both require and result in high market share, and create an entry barrier to potential competitors, who may be unable to achieve the scale necessary to match the firms low costs and prices. The second dimension is achieving low direct and indirect operating costs. This is achieved by offering high volumes of standardized products, offering basic nofrills products and limiting customization and personalization of service. Maintaining this strategy requires a continuous search for cost reductions in all aspects of the business. The third dimension is control over the supply/procurement chain to ensure low costs. This could be achieved by bulk buying to enjoy quantity discounts, squeezing suppliers on price, instituting competitive bidding for contracts, working with vendors to keep inventories low using methods such as Just-inTime purchasing or Vendor-Managed Inventory.
Differentiation strategy: Differentiate the products in some way in order to compete successfully. A differentiation strategy is appropriate where the target customer segment is not pricesensitive, the market is competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy. These could include
patents or other Intellectual Property (IP) unique technical expertise (e.g. Apple’s design skills) talented personnel (e.g. a sports team’s star players or a brokerage firm’s star traders)
Successful brand management also results in perceived uniqueness even when the physical product is the same as competitors. This way Starbucks could brand coffee, and Nike could brand sneakers.
Focus or Strategic scope This strategy describes the scope over which the company should compete based on cost leadership or differentiation. The firm can choose to compete in the mass market with a broad scope, or in a defined, focused market segment with a narrow scope. In either case, the basis of competition will still be either cost leadership or differentiation. In adopting a broad focus scope, the principle is the same: the firm must ascertain the needs and wants of the mass market, and compete either on price (low cost) or differentiation (quality, brand and customization) depending on its resources and capabilities.
Hence MICROMAX has successfully implemented Michael Porter three competitive strategies.
MICROMAX OBJECTIVES
Focus on urban market specially youth 18-25 years Micromax is Focusing on smart phones and tablets. As smart phone is going to be the future of mobile market. To start new plant and reach market share of 20% and to increase market share, it is essential to increase production capacity. Focus on international markets. On making strong focus on rural market and urban market in India, Micromax needs to expand to international markets and enter into neighboring Indian countries, south African countries etc.
PRODUCT INNOVATIONS
Micromax product portfolio embraces more than 60 models today, ranging from feature rich, dual-SIM phones to QWERTY, touch-enabled smart-feature phones and 3G Android smart phones designed for younger consumers in suburban and urban markets. It also introduced the dual SIM and though the dual SIM feature is present in 2030%of all mobile handsets sold in India, the company offers this feature on 22 out of 26 phone models it sells in India. All its products were designed to suit the domestic ‘palette and majorly all designs focused on ‘utilitarian concept.
PRODUCT DIFFERENTIATION Micromax reaches Indian mass by launching new and innovative products since inception. It has many first to its credit like
First Long Battery Life Phone with 30 days battery backup( X1i Marathon Battery phone with 30 days standby time & 17 days Talk time ) First Dual SIM Dual mode active Phone (GSM+CDMA) (Micromax GC700 is the first GSM + CDMA Mobile phone) First Gaming Device ( G4 Gamolution phone with motion sensor gaming like WiFi ) First Womens Line of Devices (Q55 Bling phone- First womens phone with a swivel form and Swarovski navigation keys) First Universal Remote Control Phone ( X235 With Universal Remote Control for TV, DVD, AC in your phone) First phone with built-in blue tooth ( Micromax X450 Van Gogh A stylish phone that integrates a detachable Bluetooth headset in its sleek design)
First Superfone with Gesture Control (Created a new category called ‘Superfone with Gesture Control, powered with 1GHz dual core NVIDIA Tegra 2 Processor)
TARGET MARKETS Currently Micromax is dominating the rural market. Initially the marketing strategy of Micromax was to target rural market. They are basically catering to the need of the customers of the rural area. For example the first mobile Micromax introduced in rural area was having the battery backup of 30 days which was catering to the need of the rural market of inconsistent power availability. Other markets which they focus are as follows
TARGETING WOMEN
On the occasion of Mothers Day, Micromax announced the launch of its latest Android phone targeted at women.
TARGET YOUTH
As smart phones are future of telecommunication industry, Micromax has started focusing on it strongly.
TARGET PROFESSIONALS
Professionals keep two phones in todays life:• One for Professional use• One for Personal use• Micromax came up with Dual SIM mobile phones. Micromax focuses on this target to cater need “A single phone with Business and Private use with separate numbers and bills”.
MICROMAX DISTRUBUTION NETWORK Apart from the Product, Price and Promotion Micromax has shown strength in another significant aspect that is distribution network. Achieving supply chain superiority or excellence is within the reach of any company. However, it requires a vision, as well as the organizational imperative and willingness to invest in the right direction. 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. And distributors were offered higher margins than what Nokia offered. 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.
Micromax has a 3 tier distribution network in India, which extends across 65 super distributers, 1500 micro distributors and over 100,000 retailers. To enhance brand cognizance and retail strength, Micromax has a chain of exclusive retail outlets, owned by third party.
MICROMAX MANAGEMENT
Micromax focuses on the pulse of the consumer and hence constantly invests into strengthening the product portfolio though R&D and innovative marketing strategies. The product portfolio embraces more than 60 models today, ranging from feature rich, dual-SIM phones to QWERTY, touch-enabled smart-feature phones and 3G Android Smartphone’s. Also lay special focus on the products to enhance the customer’s overall experience with the device. Most of the products come with innovative packaging and bundled accessories. Globally, Micromax caters to a varied target audience having their focus majorly on the youth. The Strategy focuses on innovating, designing and using the latest technologies to develop products at affordable prices. Products are tailor-made to suit the needs and aspirations of the growing consumer base in the international markets.
The other aspect of it success is that Micromax is one company that has managed to understand the Indian consumer psyche much better than the multinationals as well as the home-grown companies.
For its Entry level tablet Micromax strategy revolved around education and entertainment (edutainment). It tied up with Pearson, Everonn, Vriti (for education) and for entertainment it had tied with Bigflix, Hungama, Indiagames and Zenga. With it Micromax saw an impressive sale of 65,000-70,000 per month. In the smartphone segment, the company incorporated applications that made its products stand out despite the low price stamp; it had Aisha with the same features as Apples Siri, a voice-controlled personal assistant. Micromax also launched a mobile messaging application HookUp.
COMPETITORS Micromax knows that there are many established brands in Mobile Phones industry like Nokia, Samsung, LG and several other local as well as Chinese manufacturers .Some
major competitors and their strategy and strengths are identified as below: Nokia, Samsung, Apple, Htc
VARIOUS STRATEGIES FOLLOWED BY MICROMAX
MICROMAX MARKETING STRATEGY
Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a suitable competitive advantage. Driven by growing aspirations of the Indian mobile users, Micromax has geared up to bring about a paradigm shift in the way cell phones are used by introducing groundbreaking mobile solutions technology. Micromax marketing strategy is to improve the visibility in the urban markets by improving awareness of customers for our products and also building brand image. When Micromax entered the segment, it followed a simple strategy of bringing innovative products for the consumers and coupled it with smart marketing. The companys success could be attributed to the ‘ Out of the Box thinking and thus providing Innovative & insightful products to the masses. At Micromax, the target audience is youth who want innovative, stylish phones that are affordable. Today the mobile phone category is driven by youth, with about 60% of the users under the age group of 20-40 yrs and Micromax utilizes every opportunity to connect with the youth. Micromax understands that building connect is all about being involved with the customers and also giving them the value for money. Through their products and innovative campaigns, they aim to provide value additions to the Micromax users and have him or her involved by creating unique brand proposition.
THE MARKET ENTRY STRATEGY Micromax had a clear positioning strategy when it started its operations; it had a huge domestic market to tap. Samsung and Nokia were battling out for supremacy in the Indian market; however Micromax was quick to see some of the gaps, especially in ‘affordable feature and smartphone segment to tap rural Indian markets and middle class who were looking to upgrade to smartphones, but with lesser spending power.
Their first line of phones was around the features of ‘dual SIM and ‘longer battery life, which made their phones hugely popular among the Indian masses. When Samsung launched Galaxy Note, Micromax was already selling its tuned down version with almost all the features at quarter of its price. Micromax believed in faster turnaround, launching new models quickly at lower price. This really helped them to grow faster and penetrate the price sensitive Indian market.
BUY VS BUILD STRATEGY It was sure that Micromax cannot compete with giants like Apple and Samsung on spending huge money on R&D, however they concentrated on supply chain and buying the technology which will work for them to bring out comparable good quality models at lesser price. They had handsets sourced from China earlier, but now they are planning to build some of it in their Indian plant where their tablets and LED TVs are already being manufacturer.
AGGRESSIVE THINKING The other advantage that has worked in their favour has been their aggressive approach when it comes to product design and launch. We can see this in couple of instances, when they brought out 5 inch screen phones and also when they brought in Android in entry level phones. Their Canvas phone which had a 5 inch screen compared to 5.5 inch of Galaxy Note of Samsung did well to capture initial sales volume. This strategy helped them to tee off Nokias Asha phones and Samsungs lower end models.
DIRECT COMPETITION Many research agencies indicate that Micromax is now standing second to Samsung in Indian market. Though Micromax threaten to reduce Samsungs share initially, now it seems to be fading. Their market share has dipped from over 20% to now 15%. Samsung unlike Nokia and Apple have been quite successful in bringing out localization strategies with multiple models to different local segments and a strong distribution and servicing network too.
CONSUMER CONNECT THROUGH CONSUMER BRANDING Micromax realized in its early years itself that though it made a name in ‘inventing surprises it is not a sustainable strategy in an industry which is a crowded market. They had to provide something more sustainable to retain the customer to itself. This could
be attained through connecting with customers and establishing a long lasting relationship with them. The answer was consumer branding. According to American Marketing Association, ‘brand is a name, term, sign, symbol or design, or a combination of the intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers.
MICROMAX AND HUGH JACKMAN Successful entrepreneurs globally have had to take a decision like this at some point or the other to ensure their company keeps growing. Micromax proved no exception. Micromax seems to be ready for heavy marketing investments. Appointing the Hollywood star answers the need for Micromax to build an international image. With this, Micromax becomes the first Indian mobile operator to have roped in a Hollywood star as its brand ambassador. Micromax is largest handset seller in India after Samsung and first Indian based mobile handset brand that came up with this much
PRODUCT STRATEGY
On the product side, Micromax has a wide range of phones with different features and thus offering variety to the customers. Micromax has a lot of interesting and thoughtful products. Micromax has been able to successfully identify the needs of customers and design products appropriately. Micromax believes that consumers in India have unique preferences with respect to mobile handsets such as long battery life, dual GSM capability, low-cost QWERTY phones, universal remote control and gaming phones. Also, the company has invested heavily in the product development as of now to capture market share in urban
PRICING STRATEGY Its at the core of Micromax to serve the customers by proving them with lower cost, value for money products. Thus Micromax will adopt penetration pricing in the urban market because placing our product at a lower cost will serve our purpose and make the customer
rethink before buying other competitors product such as Nokia, Samsung, etc which are at a high price segment. So with a lower price they provide with almost same functionality which in turn help them in gaining a better share in the urban market as they also want lower prices phones with higher functionalities which has been proved by their marketing survey.
PROMOTION STRATEGY To increase visibility further, Micromax bombarded the market by advertising through outdoor, online, radio, exchange schemes and promotions via social causes. The motive of this strategy is to increase our visibility in the urban markets. So making people aware about Micromax incur high promotional expenses in terms of I. Hoardings and banners II.Advertising online III.Sponsoring in the social cause events
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.
MICROMAX VARIOUS OTHER BIG COLLABORATIONS MICROMAX AND VODAFONE Micromax announced a strategic partnership with Vodafone India. The partnership aims to drive data growth in India with an exciting deal for the internet savvy generation. Under this new partnership, Micromax and Vodafone India are coming together to provide a more fulfilling device connectivity and experience.
MICROMAX AND AIRCEL Mobile handsets maker Micromax has tied up with telecom services provider Aircel to offer cheaper voice and Internet services to customers. Under the deal, buyers of Micromax smartphone and tablet
computers will be able to get Aircel voice and Internet services at competitive rates. Aircel opted for Micromax because of the latters affordable range of large-screen smartphones, or phablets.
MICROMAX AND PANTECH Micromax, which recently announced international expansion plans, looks to become the first Indian handset maker to enter the Russian market. According to a Reuters news report, Micromax has expressed interest in buying into Pantech, South Korea’s third largest Smartphone. Micromax, which already sells its handsets in Saarc and Russia, would also get access to markets like the US and Japan, that Pantech serves. It has plans to increase international presence and climb up from the position of world’s 10th largest mobile phone maker. success.
MICROMAX AND MICROSOFT WINDOWS The Domestic handset maker Micromax becomes a new partner of the Microsoft and will offer Windows Phone 8.1-powered Smartphones. Micromax will be one of the first companies to launch Googles low-cost Android One handset in India. Micromaxs growth has been significant that global companies have started to partner with the handset maker in their entry into the competitive Indian smartphone market. Microsoft chose the New Delhi-based firm to launch a Windows 8.1 low-cost cell phone that is powered by Qualcomms chipset.
SWOT ANALYSIS OF MICROMAX MOBILES Strengths
Innovative products and features- Marathon battery mobile phones with a 30-day battery life, phone which is programmable as a universal remote control, gravity phones are some of the features which have increased the popularity of the product. Low cost of production –For a company that has been importing all its devices from China, Micromax has now taken a new turn by making a few products at home. Both the R&D and design are carried out in India. No debt burden- Micromax has no debt on its balance sheet. The company doesn’t believe in taking loans from financial institutions for expansion. It had, in the past, only raised one round of funds from TA Associates and Sequoia Capital, which together hold about 20 per cent of Micromax. The rest of the stake is held by the four founders. Effective promotion campaigns- Micromax has been promoting its products through famous celebrities and has also had tie ups with MTV. However, of late it has set up a plant in Baddi in district Solan in Himachal Pradesh to offer Indian products to Indian consumers. The major attractions for setting up plant in Baddi were the slew of tax incentives that the Government provided. These were a 100 per cent outright excise duty exemption for a period of ten years from the date of commencement of commercial production, 100 per cent income tax exemption for an initial period of five years and thereafter 30 per cent for companies for a further period of five years, and capital investment subsidy of 15 per cent on plant and machinery subject to a ceiling of Rs 30 lakhs. There were many tax incentives provided by the State
Weaknesses
Perception of low-quality Chinese brand- Micromax has a manufacturing unit set up in china which has strengthened this perception among people. Low customer acquisition and retention services which can be increased by providing better after sales services.
Opportunities
Increase penetration in urban market. Entry into international markets-Micromax has the potential to make its presence felt on global scale eventually as it establishes itself in the domestic market.
Exchange offers will also be a major tool for customer retention as the customer will be getting additional discount on the new Micromax phone he buys by exchanging the older one. Thus this will help create a chain of transactions with customers. . The company is also working on launching smartphones based on 4G once the long-term evolution infrastructure is in place, which would be also priced ‘right.
Threats
Increasing competition from local and international players- With well established players like Apple, Nokia, Samsung, etc Micromax faces a tough competition from these players. But in todays fast paced world, where change takes place in nano seconds, it becomes increasingly difficult to compete only on product functionality and innovative product features. The first mover advantage is transient (very short lived). Therefore, only focusing on the product and attaining manufacturing efficiency would not do. Organizations need to look for more sustainable strategies. The players need to look beyond core product and focus on complementary assets like supply chain efficiency, brand equity, and relationship management with customers as well as dealers to emerge a winner. Replication of business model by competitors- Micromaxs business model has been replicated by many new players which again pose a threat to Micromax
Micromax: The king of Competitive Advertising Micromaxs rebellious sojourn began early with its Micromax A70 campaign that mocked the popular iPhone Ad simply replacing the iPhone with the sound of throat scratching. While Apple and iPhone were a little too big to be worried by such gimmicks, Micromaxs Ads definitely rang home the message to typical consumers. Micromax isnt the first company to think along the lines of hitting straight at the heart of competitor with Ad campaigns. Since time immemorial both Coke and Pepsi have been at loggerheads with each other both on their marquee products as well as on MoutainDew and Sprite commercials.
DRAWBACKS IN MICROMAX APPROACH Lack of Innovation and originality Micromax may be busy taking on its international competitors by simply making their technology cheaper and more affordable but its approach may endanger the brand in future. While Micromax is a fairly innovative company with some interesting additions to its Smartphones, from Gesture control to Voice assistants, it is often the standard specs that are innovated upon. Micromax has yet to file any significant patent. The company continues to use existing and often out dated processors to produce its affordable Smartphones and insists on using design elements that have been used by its international competitors. For them to be taken seriously, Micromax may have to slowly break away from their competitive approach to build on newer technologies and bring in more “firsts” to the Indian market. Micromax has done this significantly in the feature phone segment, but has not yet managed to do so in the Smartphone segment. Micromax made some cheeky advertisements making fun of Apple for being costly and then they took on Samsung with advertisements targeting their lower end series. But you cant deny that fact that being in a mobile phone market for more than half a decade also helped them in gaining the faith and trust of buyers. Value for money factor exceeds quality expectations
LARGER LAUNCHES The year 2012 has been very active for the company. Micromax made its debut in the smartphone landscape launched 22 smartphones in the Indian market, the maximum so far by any manufacturer. If we compare other manufacturers, then Samsung launched only 4 new models.
MICROMAX PRESENT SCENARIO In its home market, Micromax is struggling to win over the top position in the Smartphone segment from current leader Samsung. According to International Data Corporations (IDC) report for Q2 2013 for India, Micromax crossed the 2 million units mark in sales. Though the positions of global vendors like Samsung, Nokia, Blackberry and Apple are strong in India, their market shares have been steadily dropping due to intense competition from the local vendors including brands like Micromax and its competitors like Karbonn, Lava, Intex and Celkon. The IDC report says While Samsung still controls 20% of the market share in overall vendor share, Micromax has been pushed to 12% of market share. Nokia is witnessing a growth and is at 13% while Karbon is in neck-to-neck competition with Micromax at 13% of the market share.
MICROMAX TREMENDOUS GROWTH The Micromax is the second largest Smartphone player in India, held about 16 percent market share in Q4 2013, according to IDC data. In 2006/07, when Micromax, today India’s largest domestic handset maker, reported revenues of Rs 16 crore, Rahul Sharma and his three co-founders thought they could make it a Rs 1,000-crore company in a few years. They had no time frame in mind. But just seven years later, Micromax has grown about 500 times, to Rs 7,500 crore in 2013/14. The formula was simple: offer consumers the handsets that they wanted - the qwerty "Q" series in 2009, the Swarovski-encrusted Bling series for women in 2010, and more recently, Android touch phones - at some of the lowest rates in the market. Micromax’s leading rivals have changed over the last seven years. In the feature phones era, it fought Nokia. When qwerty was a rage, it was pitted against BlackBerry. Now it is taking on Samsung’s and Apple’s smartphones. While Nokia and BlackBerry are struggling, Micromax has grown stronger. And Sharma, who drives a Bentley Continental GT, is dreaming bigger: he wants Micromax to be among the top five globally in five years.
SUCCESS OF MICROMAX A consumer Electronics Company based in India primarily known for its smart phone manufacturing. Micromax started as a software company in 2000 but started getting recognition only after they started their mobile phone manufacturing operation in 2007, and became the largest local producers in 2010.During their rudimentary stage in India; Micromax was fighting the big names: Nokia (The erstwhile largest player. Microsoft acquired the giant when they failed due to the lack of pace in their innovation), Samsung, LG, Sony Ericson and others.
Micromax tasted success because they adopted strategies that are key to a company adopting the Blue Ocean strategy. Interestingly, as with the case of Blue Oceans, Micromax created a mobile market demand for them by catering to the local Indian tastes, needs, preferences and issues. They did not look far beyond the Red Ocean. They just restructured the boundaries of the existing Red Ocean. Micromax “created a new space, challenged the competition, expanded and catered to the demand and broke the barrier of value-cost trade-off”. India has a mammoth demography spread across the rural and urban areas. Now cell phone being a key element of business. However, the truth remains that the phone
needs to be charged repeatedly. India has imminent power issues, and especially in rural areas. Micromax wanted to create demand by revolving their selling point that addresses the issue. They launched their first model named X1i, which claimed to have battery charging that lasted 30days.This triggered their network effect. In India, there is hardly any concept of locked phones. Again, Mircomax differentiated with smart innovation that fit the local needs. They launched the first dual-SIM phone, which could support two active SIMs at the same time. Other global brands found it difficult to launch their dual-SIM versions very soon. Post that success, where they made themselves visible amongst the bigger players, came the era of smart phones. Although only around 20% mobile phone users in India use smart phones, Indian market is 3rd largest Smartphone market after China and the US. Owing to the style, features and capabilities, with the changing trends everyone aspires to have Smartphones. However, not all could afford the price for a high-end Samsung model or an iPhone, which is nothing short of a status symbol in India. Micromax appealed the Indian emotion, and targeted the youth by launching a series of low-priced versions of Smartphones. And yes, all Smartphone are powered by Android OS. Android was easily the biggest factor for Micromaxs success. Market leaders are using android too. Hence, it brought about standardization of mobile OS, and in-turn product differentiation became difficult. In this scenario, the Samsungs and the LGs were at a disadvantage because Mircomax launched a series of smart phones similar to their high-end models at a price a fifth as theirs. They do not build components. They smartly customize it by using cheaper products. So far, this formula is working guns for them, at least in India. They have sold large volumes of Smartphones. Their present target is to unseat Samsung from the top position, which holds the highest market share. Micromax is also increasing its market to other countries like Nepal, Bangladesh, Sri
Lanka and Russia. In addition, they are increasing the product line by entering into Tablets, LED TV and 3D Data card market. All the above have insured that a little known Indian mobile handset manufacturing company has been able to beat the existing competition in India via creation of Blue Ocean within known Red Ocean market space.
Blue Ocean Strategy suggests that an organization should create new demand in an uncontested market space, or a "Blue Ocean", rather than compete head-to-head with other suppliers in an existing industry.
CONCLUSION Micromax is arguably one of the biggest success stories when it comes to ‘Desi branded mobile phones. The company has grown quickly over the last 6 to 7 years to become one of the largest Indian mobile handset manufacturers with a major presence in South Asian countries and with revenue touching Rs 7500 crores. However, the company is yet to establish a global footprint. Micromax is a darling of the Indian middle class and rightly so. But its approach thus far has been questionable with respect to Advertising and product pitching. Perhaps its time for Micromax to build on their own brand value than derive from the brand value of competitors. Micromax India, which started out as the go-to company for ‘budget mobilephones, has emerged quite positively in the smartphone market. As markets develop mobile phone manufacturers will have to adapt their value chain approaches and re-think the basis of future competitive advantage. Micromax has broken the norm and proved that even a small player can make a place for itself. Therefore, one can conclude, that being big and strong with an impressive balance sheet is no longer a guarantee of long term survival or a guarantee for entry into a highly competitive market space. In the struggle for survival, the fittest win out at the expense of their rivals and make a place for them because they understand the environment and also adapt themselves best to their environment. Micromax tasted success because it understood that India is predominantly a rural economy; and it used its knowledge of India and business acumen to mine consumer insights and thereby create impactful product launches. Further it supported its efforts
with an efficient manufacturing system, agile and responsive supply chain, consumer branding and effective dealer and consumer management strategies. Micromax needs professional management for various reasons. For one, it is looking beyond the handset business. While Sharma maintains the markets in India and other developing countries are still not fully tapped, especially the Smartphone segment, the company has already ventured into LED televisions. They require strategic direction to take the company’s billion dollar business to the next level of growth and expansion.
REFERENCES
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