Consumer buying behaviour report Micromax mobile phones By Mansi Choksey Roll no. 19 PGDM Marketing Product chosen: Micromax Mobile phones Issue to be addressed: How to increase Market share: Background on the company: Micromax Mobile needs no introduction today. Just two years back people were not aware of the brand at all but today it’s India’s third largest mobile selling company by volume after Nokia and Samsung (IDC Report). Brand’s success can be attributed to it’s ability to understand the need of the market ,aggressive marketing with a budget of Rs. 00 crore and smart distribution channel management. Its one of the leading Indian Telecom Companies with 23 domestic offices across the country and international offices in Hong Kong, USA, Dubai and now in Nepal. With a futuristic vision and an exhaustive R&D at its helm, Micromax has successfully generated innovative technologies that have revolutionised the telecom consumerspace. As per IDC report Micromax displaced LG to become third largest selling mobile handset company in india with a market share of 6%.
Nokia is market leader with 62% share and Samsung is on second place with 8% market share. The company today sells more than a million handsets a month and is now a Rs. 1600 cr worth brand. The company has presence in more than 500 districts and 90,000 retail outlets. The company started its Mobile handset business in 2008 and the challenge was to establish an identity in a market dominated by big MNCs Like Nokia,Samsung,LG and Motorola. Today Micromax has become a brand which people relate and look up to for realizing their individual device preferences and other out-of-the-box solutions.
Micromax, is now churning out 1 million phones a month. Micromax is on a mission to successfully overcome the technological barriers and constantly engender “life enhancing solutions”. The company’s vision is to develop path-breaking technologies and efficient processes that incubate newer markets, enliven customer aspirations and continue to make Micromax a trusted market leader amongst people. Micromax founders : Rajesh Agarwal: handles company finances Sumeet Arora: chief technology officer Vikas jain: handles alliances with other companies
Rahul Sharma: risk taker with the big ideas 4 P’s of marketing for Micromax mobiles: 1. Product Micromax has been quite effective in the marking a difference with almost every product that it launched. The range that they have covered varies quite a large variety. Right from the handsets with 30 days battery backup, dual SIM, handsets switching networks (GSM -CDMA) using gravity sensors, aspirational QWERTY keypad handsets to operator branded 3G handsets to the most exciting OMH CDMA Handsets, etc. Every product of Micromax had the potential to grab the attention of media as ell as the consumers in a market which is already flooded with mobile phone handsets and a launch is there in every day or two. 2. Price Micromax specialized in entry-level and mid-segment handsets priced between Rs1,800 and Rs2,400 when it started selling the devices in 2008, confining itself to small towns and rural areas in the first 12-18 months. Encouraged by its success, the firm expanded to larger cities and now has a distribution network of 55,000 retailers, which it plans to scale up to 70,000 by the end of March as part of its strategy to raise sales to 1. million handsets a month. 3. Place Micromax is one of the leading Indian Telecom Companies with 23 domestic offices across the country and international offices in Hong Kong, USA, Dubai and now in Nepal. Micromax has invested Rs100 crore to set up a plant in Baddi in Himachal Pradesh as it feels outsourcing manufacturing completely leaves the door open for supply-side uncertainties. Production will be scaled up from an initial 50,000 per month. “If everything goes right, by the third phase in March 2011, the Baddi plant will be making about 500,000 handsets,” Jain said.
If the plant isn’t able to cope with the numbers, the fallback plan is to acquire a facility in South Korea, Taiwan or China, he added. 4. Promotion Having gained traction, Micromax is also working on a strategy to create awareness in the metros, which includes tying up with MTV for co-branded phones. Micromax has also tied up with a Bollywood celebrity “AKSHAY KUMAR” as brand ambassador. Micromax has also tied up some pretty big brands like Yamaha for enhancing their audio experiences and the X360 comes with an MTV branding and exclusive content.
It is utilizing the integrated market communication tools like sponsoring events (cricket match and film awards), advertising through hoardings, TV, radio etc very effectively. With a 360 degree advertising and marketing strategy sketched out, the company has an optimistic outlook for the telecom consumer space. Currently present in more than 40,000 stores across the country, the company plans to have an aggressive market incursion to reach out to its customers through 70,000 operational stores in the coming year The following tools of IMC are being used by Micromax:
Events and experiences For marketing of its products the company is riding on two enduring Indian obsessions–sports and films–to build its brand. Following up on its association with the popular Twenty20 cricket Indian Premier League (IPL), Micromax, a brand that is less than three years old, has become the title sponsor of almost all tournaments and series of which India is a part, including the recently concluded Asia Cup, the forthcoming India-Sri Lanka Test series and the India-New Zealand-Sri Lanka tri-series in August.
The objective behind the cricket “roadblock”, as such behavior is termed in advertising, is to drive brand awareness and recall. The company believes that while cricket may boost a brand instantly, viewers may still not remember the brand after the match or the tournament. Even if consumers remember a series, they may not remember the advertisers. That’s when they thought of a roadblock and decided to sponsor all cricketing properties post IPL. Bollywood is also a major platform for the brand, which is targeting consumers between 18 and 27 years.
Bollywood’s most bankable star Akshay Kumar was signed on as the brand ambassador six months ago. More recently, his wife Twinkle Khanna was engaged to promote Micromax’s bling phone that comes with Swarovski crystals and a vanity mirror. To push its association with films, the firm also sponsored the IIFA (International Indian Film Academy) Awards held in Sri Lanka, where Micromax recently launched its phones. The brand is now ready to enter Bangladesh and West Asia. Advertising Broadcast media micromax use television to broadcast their advertisements. Apart from using cricket, films, celebrity micromax also advertise through news papers.
They also utilize hoarding and bill boards to advertise their products. Prime site recently kicked off a month-long campaign for Micromax mobile phones in Delhi, executed mostly through hoardings. Going further, this promotion will be extended to the other regions of northern India as well. All the Medias used by micromax are very carefully selected as to reach its target audience and through each medium the innovative aspect of the product is portrayed. The three advertising objectives of micromax mobile are * To create awareness * To increase recall of their brand * To create brand equity.
Company’s current marketing strategy: 1. Tapping the Indian consumers by knowing what they need specifically: a. Indian context: When Nokia or Samsung roll out a new model they do so from its global portfolio rather than launching something specifically for India. Micromax realized the fact that there are certain unmet needs still there in the market which is not being addressed by big brands. Micromax’s strategy ,since their inception has been to identify the unmet latent needs of people and come up with a product which no one else has and thus fits well with the consumer need. b. Rural context:
Micromax initially targeted rural market and once it established its presence went on to lure urban youth. Micromax’s first innovation – a handset with 30 days of standby battery life — crucial in a country like India where power failures are common. Also in rural areas its not easy to charge one’s mobile phones because not only are there power failures but also they don’t have money to pay for electricity every month and hence such a phone was introduced. Also One of the major aspects that contribute towards the substantial monthly growth of Micromax is its 80% sales in the rural areas.
After building a strong presence in the rural market, where the prominence of both subscribers and operators is rapidly increasing, Micromax is now progressively moving towards establishing its foothold in the competitive urban towns as well. 2. Value for money & Cost effective: The company didn’t bank on price competition only rather it catered to the needs of people unaddressed by MNC brands. Big brand like Nokia, Samsung had not introduced Dual sim phones earlier. But with the onset of such phones launched by Micromax, Nokia , Samsung etc. ave tough competition and their phones are just a case of “me-too” products. Also Micromax has made sure that all their mobile phones are value for money and serve the purpose and the need of the customer. 3. R&D and Innovation : Versatile Product Portfolio: It was the first to introduce: a) Handsets with 30 days battery backup b) Handsets with Dual SIM / Dual Standby c) Handsets Switching Networks (GSM – CDMA) using gravity sensors d) Aspirational Qwerty Keypad Handsets e) Operator Branded 3G Handsets f) OMH CDMA Handsets, etc. . First mover advantage: They have introduced phones specially targeting the Indian people which were never even thought of remotely by the top players in the mobile phone industry like Nokia & Samsung. So they clearly have a first mover advantage. 5. Outsourcing the manufacturing: Instead of manufacturing itself, Micromax sourced its handsets from 12 factories in China, South Korea and Taiwan. It was model-based sourcing: Micromax would come up with an idea and give it to the factory best placed to deliver it.
This is different from, say, Nokia, which would be compelled to stay in-house or go to a vendor-partner, even if another vendor had better capabilities to execute a particular model. 6. Smart distribution channel management: Micromax also looked at distribution in a new way, standing by its cash-only model. While rivals offered a 60-day credit line, Micromax refused to give credit. “If the distributor does not buy your handsets, there is no pressure on him to sell them,” explains Mr Agarwal. At the same time, Micromax offered to supply distributors regularly to keep inventories down.
So, distributors didn’t have to shell out large amounts upfront or have a lot of money locked in. “If we give a distributor 1,000 handsets and ask him to sell them over a month, he will worry about his daily sales,” says Mr Agarwal. “But if we supply less, demand will be close to equal or more than supply. ”Micromax has 34 super-distributors across India. Unlike a Nokia or a Samsung, it doesn’t interact with the 500-plus sub-distributors. Neither does it intervene in how the super-distributors sell or place the products. “We offer our super-distributors a 15% margin, which is higher than the ndustry average of 6-10%,” claims Mr Jain. 7. Unmet needs of consumer 30-DAY BATTERY PHONES April 2008: Rs 2,249; Now: Rs 1,999 The X1i, Micromax’s first phone, had a battery that could give 17 hours of talk time and go 30 days on a single charge. DUAL-SIM PHONES July 2008: Rs 1,999-12,999 For those who want two numbers but one handset PHONE-CUM-REMOTE May 2010: Rs 2,999 A mobile that can switch TV channels and even change the AC Temperature PHONE-CUM-STEREO Feb 2010: Rs 4,999 With 3D surround sound, fed by Yamaha and Wolfson BLING Feb 2010: Rs 5,500 A big hit with women, comes with Swarovski embellishments
IN THE WORKS A mosquito-repellent phone. A phone that can be used as a computer mouse Micromax focuses on being different 8. Production related moves: Micromax is investing Rs 100 crore to set up a manufacturing plant in Baddi, Himachal Pradesh, to ensure its outsourcing model does not cause supply-side uncertainties. Production is being scaled up from 50,000 units per month to 500,000 units a month by March 2011. How to increase the market share with respect to the consumer buying behaviour: Steps of consumer buying behaviour: 1) Need awareness:
The beginning point of most purchasing is your potential buyer recognition of a need in their life. This need can be established by encountering a problem or prompted by a company’s marketing. Already Micromax is into a lot of marketing through promotions, Ads, sponsorships of events, etc. But few suggestions on that front to make sure that their potential consumer hears them rightly is – * Now they are at the 3rd position in the mobile handset industry and they have achieved a good market share in a very short span of time, so their advertisements should focus on brand building. They don`t develop very creative advertisements, sometimes their advertisements are mere noises like the advertisement featuring Akshay kumar. They must add creativity to their advertisements. (Micromax Bling Ad featuring Twinkle Khanna is an exception to this point). * Break the resistance of no need by aligning their marketing with the current needs and wants of your market. * It’s a general norm that whatever is expensive is good to use, of high quality, has more life and is definitely something which will increase one’s status.
So it would be a good strategy to increase the prices which will work for the image of Micromax because there is a risk of the brand being perceived not as an aspirational brand but a ordinary price warrior if it does not focus on the quality of the communication. * The needs of not even two consumers are the same. Therefore, they buy only those products and services, which satisfy their wants and desires.
To survive in the market, a firm has to be constantly innovating and understand the latest consumer needs and tastes it will be extremely useful in exploiting marketing opportunities and in meeting the challenges that the Indian market offers. This reality can be turned into an opportunity by introducing “Customization of mobile phones”. a) People can goto Micromax mobile stores, and fill a form listing their options of the type of phone they want, color of the phone, screen size of the phone, features like audio player, radio, one –touch applications, etc. & all other specifications of the phone. ) Once that form is filled the Micromax staff can show a picture of the newly designed phone to the consumer on a computer and if necessary can make any changes and then finally place the order for such a phone. c) Payment terms and conditions can be advance payment – half the price of the phone at the time of placing and half at the time of delivery. This makes the consumer feel that the mobile phone company is not only generally consumer centric but it believes in the fact that every person is different and unique in his/ her own way and would have different needs and wants.
Also this gives a chance to the consumers to become innovative and its definite that a consumer will definitely want to buy such a phone again from Micromax. 2) Information search: Its important to make sure consumers know about all the new variants and products that the company introduces. With the rise of the Internet, it has never been easier for buyers to research their purchase. It needs to make sure that all information is readily available on the website.
They can break the resistance of lack of education by adding an educational seminar to their marketing mix to provide maximum information about their company, phones, promotions, variants, prices, etc. to not just the tech-savvy urban population but also the rural people. Their goal at this point in the buying process is to get their product or service in front of the consumer. They need to make them aware of their solution. 3) Check options: Once the consumer understands his or her situation and has gathered research on possible solutions, the mobile handset buying process enters an evaluation period.
The consumer now starts to take a close look at specifics, such as the company providing the solution, the brand name of the product, and the features and benefits of each solution. Branding and product differentiation are extremely important tools of persuasion during the evaluation stage. This is where the strategies listed above would help Micromax gain an edge over its competitors and increase the market share when a potential consumer would sit and evaluate his options while buying a cell phone. 4) Purchase: After a comprehensive review of solutions and specific products and services, the consumer makes a purchase decision.
At this point in the buying process, supporting information needs to be provided to reinforce the decision to buy. Help the buyer by telling them what and why the company/ staff in the store would recommend a certain handset as they are the experts in that. Also Depending on urban / rural population, the company can provide different payment options or billing terms. 5) Evaluation of the purchase: The buyer will look for reinforcement from media, friends, and other sources confirming they made the right decision. Cognitive dissonance or “buyer’s remorse” happens when the buyer begins to feel the purchase wasn’t right for them.
To make sure such dissonance doesn’t occur they should offer warranties, there must be after purchase follow-up calls to make sure that the consumer is happy with the handset he/she has purchased, excellent after sales service by opening as many service centers as possible in all parts of India. It is crucial to building strong relationships with customers and encouraging repeat purchases that you not only provide a positive purchase experience and after sale support, but that you strengthen the buyer’s perception that they made the right purchase decision.