Micromax-The Story

The mobile handset market in India is one of the fastest growing markets which have been primarily dominated by multinationals like Nokia, Samsung etc. However, there is an Indian player – Micromax Mobile in the horizons which has been rising fast and is posing stiff challenge to the big players in the market. This article we will be looking into the strategies which have resulted in the success story.

The Mobile Market Growth Story

About Micromax

Micromax was founded in 1991 by Rajesh Agarwaand who was originally a distributor of computer hardwares. In 1998, three more people Sumit Arora, Rahul Sharma and Vikas Jain joined Micromax as co-founders. The company branched out from a mere distributor to a marketer of telecommunication equipment. It was in 2008 that Micromax ventured into the mobile handset market. The brand wanted to create a base before taking on the large players.

The Strategy

Micromax followed a unique strategy of targeting and positioning to enter the Indian Market. Micromax concentrated on the rural market first. It was a unique strategy as the convention followed by marketers is to concentrate on the urban markets then to move to the rural markets.

Micromax launched its first phone in the rural market with a very unique USP- 30 days battery standby time. The brand was launched from a consumer insight that most of the rural households do not get enough electricity to recharge phones on a daily basis. Hence a phone with a 30 day battery standby would be a worthwhile differentiation. The first product was a big success. The first product Micromax X1i priced at Rs 2150 was lapped up by rural market.

The success of X1i egged the company to aggressively make further inroads into the market. However, tapping the rural market had its set of difficulties, namely in the logistics section as far as servicing was concerned. Micromax approached this difficulty by working on an effective distribution network. According to a report in Forbes India (March 5,2010), Micromax created a distribution network comprising of 34 super distributors, 450 distributors and around 55,000 retailers.

One of the highlight of their distribution strategy was that Micromax managed to make these dealers pay in advance by offering them more margins. According to the news report, Micromax managed this hurdle through this strategy of more margins for advance payment. It is not a new strategy to offer such kind of discounts for advance payments (cash discounts), but to make a retailer accept such an offer is indeed a remarkable feat.

Unlike many challenger brands, Micromax was careful in its product strategy. Although all Micromax products were towards the lower end of the pricing spectrum, the brand was focusing on adding more features at a reasonable price. The focus was more on value than price. Innovation, Cost-Effective, Credible and an Insightful R&D are given high emphasis at Micromax in the telecom vertical. Their product range generally has some USP which offered more value to the consumers.

The company in their website claims to have invested heavily in the product development. The brand boasts of launching many firsts in the market like

-          30 day battery life

-          Affordable QWERTY phones

-          Affordable Double Sim

1.With BSNL

Apart from the mobile handset market, Micromax was recently in the news for its alliance with BSNL. State-owned Bharat Sanchar Nigam Ltd. entered into an agreement with Micromax for sale and distribution of 3G data card to its subscribers. As per the agreement, Micromax would sell and distribute 3G data cards in the form of USB to the BSNL subscriber in various cities.

2. With MTNL

In another venture, Micromax launched the Indias first operator branded 3G mobile phone H360, in association with MTNL. The H360, pre-loaded with applications to enable video calls, mobile TV, social networking, wireless business solutions through web browsing and other Internet-based services.

3. TA associates

The success of Micromax prompted US private equity group TA Associates to buy less than 20% of the firm for around $45 million (Rs210 crore today) in December, valuing it above $225 million and indicating confidence in its growth potential.

4Ps

1. Product

Micromax has been effective in creating a splash with most of the products 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.

Micromax in fact has the ability to catch the attention of consumers in a market where there is a new set almost every month

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 1.5 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.

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 and recently the sponsorship of IPL 2010 has given the product a big fillip.

Micromax is an upcoming product in the mobile marketing sector. It is becoming a brand to reckon with in a very crowded market and with the recent technological innovations in the telecom sector the future seems to hold opportunities galore for the company

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3 thoughts on “Micromax-The Story

  1. Pingback: Rising from the bottom : The MicroMax Story « idanurag's Blog

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