Description
micro max talks about the story of Micromax and how it became such a big force in mobile market.
MICRO thinking MAXimum gain
Many of you might have heard the story of David and the Goliarth, where David was a small boy and Goliarth was a giant monster and how this small boy managing to get over this giant and kill the monster is the story all about. Such type of incidents also happens in corporate world where a comparatively small company gives a tough fight to the market leaders do some blunders and the advantage is taken by the new entrant. The case of Micromax mobile is even rate because of tow important reason. 1) It started late i.e. 2008 when most of people thought there is nothing much left in the mobile market to innovate and nobody could beat the well established players like Nokia and Samsung and other bid shots like LG, Motorola, Sony etc. 2) The firms with which it was competing are equally good and have made no blunders and have product portfolio catering to every segment. Then what was that key feature of Micromax which made its competitors a tough nut to creak and where Micromax is preparing itself to for second position coming one on one with Samsung; Nokia has considerably lost its market share from 64% in 20082009 to 52.2% in 2009-2010 according to voice and data figures. Marketing says that to get the market space you have to first create mind space and that happens when you strike the right chords in consumer’s mind and this is what is consumer behavior simplified. So for Micromax how they managed to strike the right chord where other big giants were busy tuning. Let us examine how different concepts of marketing were actually used by the company to get a lead. Innovation in product or service nowadays is the buzz word around but many companies forget that increasing the number of features doesn’t mean innovation one should keep in mind the change should add some value to consumer. For example mobile phones have 3 or 4 sim cards almost held less or no value for the customers. Here the law of diminishing marginal returns comes in to picture “Give the people something that helps them in their day to day life, they will buy it” says Sharma one of the promoter of Micromax. They came with many products innovations which could serve the needs of Indian customer. 1) By increasing the size of the battery to 1800mAh they were able to make battery that last for 30 days on a single charge and 17 hours of talk-time, this was made keeping in mind the rural customers because market statistics says that urban market is almost saturated which some regions having teledensity more than 100% so the next 300 million customer have to be from the rural market. In many rural areas there are places where uninterrupted electricity is still a dream so a mobile phone with 30 days battery life is truly made for rural India. 2) The cut throat competition among mobile services providers will ultimately lead to plural connection per user and nobody would prefer to carry different handsets for different sim cards so very obvious solution a mobile that can accept 2 sim cards and this was the second killer category where the started skimming the market. Presently
dual sim feature is present in 20 to 30 % of the mobile phones sold in India and the company offers this feature on 22 out of its 26 models ranging from 3000 to 5000. 3) Mobile companies had made segmented the market on the basis of age i.e. for youth, income i.e. anything between 1000 to 30000, status i.e. business phone, executive series, windows mobile etc. but Micromax recently hit the market by segmenting on the basis of gender which no existing companies had ever done and launched the mobile “Twinkle” with Twinkle Khanna as its brand ambassador. The looks and the features are purely feminine and it has a perfect female substance to cater to the targeted segmented. Hats off to this simple yet effective product mix. 4) The game plan was clear they didn’t want to complete with giants on price; it would lead them nowhere so the strategy was to create their own set of category and blank upon it. They came with varied features like ? A mall clip on the bottom which is actually a wireless bluetooth earpiece that can be unplugged and used. ? Another category acts itself as a remote control for your T.V. and DVD player apart from the another feature of a normal phone. ? One of the most exciting one was launched during the IPL cricket tournament a perfect event to launch a phone which acts as wireless motion sensing controller for computer games like Tennis, Golf or like the Nintendo Wii. This phone can turn any PC and laptop in to a gaming device is a perfect device for those who cannot afford to spent Rs.20000 on Wii and for those who are not game addicted their kids surely love it. Being a new entrant neither there was brand awareness like NOKIA or SAMSUNG nor could they even afford to have a million dollar marketing budget to create the buzz in to the market. So who could come to their rescue? The answer they found out in the distribution channel. They found out that retailers were getting 2% margins out of which 1% will go on giving discounts. The remaining 1% is not feasible to run business leading too much of dissatisfaction among the channel partners. Here was the twist in the story. Micromax has 34 super distributers across India unlike Nokia or Samsung interacting with 500+ sub distributers, also they does not interfere in how this super distributers sell the handsets. The offer 15% margin to the super distributers which is almost more than double of industrial average of 6 to 10% Micromax changed the way of looking at the distributers channel by going with the cash only model compared to the 60 days credit period given by the other players in the industry. Distributers are suppose to complete an online bank transfer to Micromax to getting more phones to sell further; this saved them from piling up inventories the distributors chooses only those phones which he feels is in demand and his own money is involved he will work harder to generate sales. But this means that the supply chain of Micromax is its real strength and match winning player. A company started in 1991 to distribute IT peripherals. In 1999 Nokia signed them up as an all India distributor for machine-to machine devices- essentially landlines. By 2004 Micromax had revenue of 10 crores and a staff of 80 people. The same year Nokia decided to
exit from that segment. It was shock to Micromax but they decided to turn it into an opportunity and decided to make and sell the entire thing themselves and that to 40% cheaper than Nokia 32. They started selling 35000 units a year of their own against the 10000 sold for Nokia in a year. Business peaked in 2007 with sales of 250000 devices. Instead of manufacturing itself, Micromax sourced its handsets from 12 factories in China, South Korea and Taiwan. It was model based sourcing. Micromax will come up with an idea and give to the factory best placed to deliver it. This was again a winning edge in contrast to Nokia who is supposed to stay with the in house vendor even if other vendors have better capacities. Production is being scaled from 50K units per month to 5 lac units per month by March 2011. Truly the Micromax case could serve as a very well executed case study for young entrepreneurs and they can make a note that for winning a corporate battle something other than the blue ocean strategy can also help that is MICRO thinking MAXimum Gain.
doc_486376970.docx
micro max talks about the story of Micromax and how it became such a big force in mobile market.
MICRO thinking MAXimum gain
Many of you might have heard the story of David and the Goliarth, where David was a small boy and Goliarth was a giant monster and how this small boy managing to get over this giant and kill the monster is the story all about. Such type of incidents also happens in corporate world where a comparatively small company gives a tough fight to the market leaders do some blunders and the advantage is taken by the new entrant. The case of Micromax mobile is even rate because of tow important reason. 1) It started late i.e. 2008 when most of people thought there is nothing much left in the mobile market to innovate and nobody could beat the well established players like Nokia and Samsung and other bid shots like LG, Motorola, Sony etc. 2) The firms with which it was competing are equally good and have made no blunders and have product portfolio catering to every segment. Then what was that key feature of Micromax which made its competitors a tough nut to creak and where Micromax is preparing itself to for second position coming one on one with Samsung; Nokia has considerably lost its market share from 64% in 20082009 to 52.2% in 2009-2010 according to voice and data figures. Marketing says that to get the market space you have to first create mind space and that happens when you strike the right chords in consumer’s mind and this is what is consumer behavior simplified. So for Micromax how they managed to strike the right chord where other big giants were busy tuning. Let us examine how different concepts of marketing were actually used by the company to get a lead. Innovation in product or service nowadays is the buzz word around but many companies forget that increasing the number of features doesn’t mean innovation one should keep in mind the change should add some value to consumer. For example mobile phones have 3 or 4 sim cards almost held less or no value for the customers. Here the law of diminishing marginal returns comes in to picture “Give the people something that helps them in their day to day life, they will buy it” says Sharma one of the promoter of Micromax. They came with many products innovations which could serve the needs of Indian customer. 1) By increasing the size of the battery to 1800mAh they were able to make battery that last for 30 days on a single charge and 17 hours of talk-time, this was made keeping in mind the rural customers because market statistics says that urban market is almost saturated which some regions having teledensity more than 100% so the next 300 million customer have to be from the rural market. In many rural areas there are places where uninterrupted electricity is still a dream so a mobile phone with 30 days battery life is truly made for rural India. 2) The cut throat competition among mobile services providers will ultimately lead to plural connection per user and nobody would prefer to carry different handsets for different sim cards so very obvious solution a mobile that can accept 2 sim cards and this was the second killer category where the started skimming the market. Presently
dual sim feature is present in 20 to 30 % of the mobile phones sold in India and the company offers this feature on 22 out of its 26 models ranging from 3000 to 5000. 3) Mobile companies had made segmented the market on the basis of age i.e. for youth, income i.e. anything between 1000 to 30000, status i.e. business phone, executive series, windows mobile etc. but Micromax recently hit the market by segmenting on the basis of gender which no existing companies had ever done and launched the mobile “Twinkle” with Twinkle Khanna as its brand ambassador. The looks and the features are purely feminine and it has a perfect female substance to cater to the targeted segmented. Hats off to this simple yet effective product mix. 4) The game plan was clear they didn’t want to complete with giants on price; it would lead them nowhere so the strategy was to create their own set of category and blank upon it. They came with varied features like ? A mall clip on the bottom which is actually a wireless bluetooth earpiece that can be unplugged and used. ? Another category acts itself as a remote control for your T.V. and DVD player apart from the another feature of a normal phone. ? One of the most exciting one was launched during the IPL cricket tournament a perfect event to launch a phone which acts as wireless motion sensing controller for computer games like Tennis, Golf or like the Nintendo Wii. This phone can turn any PC and laptop in to a gaming device is a perfect device for those who cannot afford to spent Rs.20000 on Wii and for those who are not game addicted their kids surely love it. Being a new entrant neither there was brand awareness like NOKIA or SAMSUNG nor could they even afford to have a million dollar marketing budget to create the buzz in to the market. So who could come to their rescue? The answer they found out in the distribution channel. They found out that retailers were getting 2% margins out of which 1% will go on giving discounts. The remaining 1% is not feasible to run business leading too much of dissatisfaction among the channel partners. Here was the twist in the story. Micromax has 34 super distributers across India unlike Nokia or Samsung interacting with 500+ sub distributers, also they does not interfere in how this super distributers sell the handsets. The offer 15% margin to the super distributers which is almost more than double of industrial average of 6 to 10% Micromax changed the way of looking at the distributers channel by going with the cash only model compared to the 60 days credit period given by the other players in the industry. Distributers are suppose to complete an online bank transfer to Micromax to getting more phones to sell further; this saved them from piling up inventories the distributors chooses only those phones which he feels is in demand and his own money is involved he will work harder to generate sales. But this means that the supply chain of Micromax is its real strength and match winning player. A company started in 1991 to distribute IT peripherals. In 1999 Nokia signed them up as an all India distributor for machine-to machine devices- essentially landlines. By 2004 Micromax had revenue of 10 crores and a staff of 80 people. The same year Nokia decided to
exit from that segment. It was shock to Micromax but they decided to turn it into an opportunity and decided to make and sell the entire thing themselves and that to 40% cheaper than Nokia 32. They started selling 35000 units a year of their own against the 10000 sold for Nokia in a year. Business peaked in 2007 with sales of 250000 devices. Instead of manufacturing itself, Micromax sourced its handsets from 12 factories in China, South Korea and Taiwan. It was model based sourcing. Micromax will come up with an idea and give to the factory best placed to deliver it. This was again a winning edge in contrast to Nokia who is supposed to stay with the in house vendor even if other vendors have better capacities. Production is being scaled from 50K units per month to 5 lac units per month by March 2011. Truly the Micromax case could serve as a very well executed case study for young entrepreneurs and they can make a note that for winning a corporate battle something other than the blue ocean strategy can also help that is MICRO thinking MAXimum Gain.
doc_486376970.docx