Since this is my first post here, let’s start with a bit of professional introduction. I have worked for 3 mobile phone brands in my career thus far, Nokia, Samsung and Huawei, in a wide variety of roles ranging from product management to portfolio planning, partnership management to strategy development. Plus, I have had the privilege of working in Europe as well as in Asia.
Having had my last working stint in India — the current battleground for smartphone companies, it was mind boggling to see how many new phones are launched here on a monthly (if not weekly) basis. And its equally amazing to note how many brands are fighting here for even a small share of this massive pie. As per a recent report by CMR, there are nearly 200 smartphone brands in India. This is after the fact that nearly 41 brands exited (whereas 15 brands entered) India market in 2018, due to competition. The big question then for all the brands is how can they become (and stay) relevant for these Indian consumers?
If we look at the data from leading market research houses like GfK or IDC or Counterpoint, then it becomes quite clear that majority of smartphones sold in India are under 15,000 INR (~215 USD). So, what is it that these consumers are looking for: Price? Brand? Specs? Reviews? Ads? …..?
From my personal experience, observations and basic understanding of Indian smartphone market, there are 3 key factors that majority of consumers look for in this market segment:
1) Value for money
2) Value for money
3) Value for money
This is not some hidden wisdom that I have discovered. Most of the brands operating in this price segment understand this simple fact — Indians are price conscious by nature and we love to get a good deal — bang for the buck. And, most of the brands compete vigorously in this price segment, albeit with very similar consumer offerings. They are all playing the numbers game and majority of the brands seem to be content with short term gains, rather than long term profitability. Until a few years back the race was about mega pixel (MP) count of cameras, i.e. who can give the most MPs in a given price range. Then came display size, then it became the battle of RAM/ROM, then mAh of battery, then number of cameras (dual, triple, quad….), and now it’s a combination of all of the above.
If we look at some of the recent smartphones launched in India around 15K INR, then they support anything from triple rear camera, to 6 GB RAM. From 25MP front camera to 5000 mAh battery. From amazing low light photography to perfect gaming experience (as claimed by various brands), and the list goes on and on. Here’s a sample of some of the most recently launched phones in around 15K price range:
There are relatively very little differences in these offerings, besides the camera (and battery to some extent) — so how do you truly stand out? In order to gain consumers mind share, and eventually a share of their wallet some brands are spending massive amount of money on all sorts of sponsorship and advertisements, while others are relying more on ‘word-of-mouth’ marketing, some are counting on their current brand value, while others are relying on brand nostalgia from yesteryear.
Without doubt, the entity that stands to gain the most from this mad gold rush is the consumer. But, what about the smartphone brands? How can they survive in an environment, where brand loyalty is close to zero and consumers are always on the look out for the next best deal? There was a time when Nokia was the undisputed leader of mobile phone world in India — you did not own a phone; you owned a Nokia. Then came Samsung, which remained on the top for several years, and over the last year or so its been Xiaomi. But, these tectonic plates of market leadership are constantly moving, and the leader of today might get completely lost in oblivion tomorrow. So, back to the main question of this post — how can a brand become and stay relevant in India?
There are several expert opinions out there, but here’s what I think that these brands need to do. The brands need to fight this battle on two fronts simultaneously — customer acquisition AND customer retention. Those that focus on acquisition only, will eventually fade out — many of the 41 brands that exited India in 2018 were primarily focusing on acquisition part. And as we know, cost of acquisition in almost any industry is much more than cost of retention. I believe a lot of current smartphone brands in India are solely focused on customer acquisition as of now, and if they don’t adjust their strategy soon, then it’s only a matter of time that they will be looking to buy 1-way ticket out of India.
Selling a phone at a relatively low price can potentially work for those companies in the long term that have a clear after sales monetization strategy — be it in form of ‘in-app/device’ advertisements (which can be annoying, but that’s a different topic altogether), brands own+partner services (music, video, app store, etc), or some kind of ecosystem play where if a user is looking to buy other products then he will be better off buying products of same brand for a seamless user experience. But the hard truth is that currently there are VERY few companies that have this kind of offering.
Hardware specs, new features, price, marketing, etc are definitely good weapons to fight the customer acquisition war. But, there’s a whole set of new weapons that are needed to fight the retention war — user experience, regular software updates, value added services, after sales service, loyalty and buy-back programs, brand community programs, etc.
There’s a lot that one can learn from Apple (though in the last year or so they have also had their fair share of challenges) or OnePlus here on how to acquire and retain customers. Yes, I am aware of the fact that both these brands launch only 2–3 products in a year and that also in a very different price range. But then again, there’s no shortage of competing products in their price range either, and yet consumers who once buy an Apple/OnePlus device usually sticks to the brand for their next purchase also. Sometime back I led a consumer research project of a small group of OnePlus users who were planning to buy a new phone in the next 3 or so months. Majority of them were so happy with their existing OnePlus devices, that they were not even willing to consider phone of any other brand for their next purchase. They loved the user experience, the regular software updates, the after sales service and the whole shebang. (Full disclosure: I am neither employed by OnePlus, nor are they paying me to write this)
There’s a very good reason why an Apple/OnePlus user is called a brand conscious user and a sub-15K Rupees user is called a value conscious user. The value conscious user needs a lot more love and caressing in order to stay in your corner when he’s planning to buy a new phone, otherwise he’ll be more than happy to make the switch to someone else who can give better value for his hard-earned money.
So, as a final advice to smartphone brands currently operating in, or planning to enter India market, have a clear plan for both, acquisition AND retention.
Good luck.
