 "Discounted sales on online platforms are a short-term phenomenon: Hari Om Rai")
Online retailing disempowers consumers and retailers as the same or similar products are sold at different prices with consumers losing confidence in brands, Hari Om Rai tells Sangeeta Tanwar
Lava has been the second-largest homegrown handset player in the Indian smartphone market for some time now. What does Lava need to do to be able to occupy the top spot?
We believe that culture is all encompassing and the most important factor determining the course of an organisation. Next is strategy. So since the beginning we have been preparing the company for long-term success. We are the only home-grown company with full, end-to-end control on the product. We are well poised to seize the opportunities offered by a growing Indian handset market with strong design, research and development teams. We have put in place an effective single layered distribution system. And we are doing 100 per cent cash sales even when the large brands are going for credit sales. With a close and tighter supply chain, we can boast of genuine sales.
With a single-layered distribution system, we are very close to the customer and hence have full control on the product. We are better positioned to communicate product benefits to retailers who in turn pass on the right product information to the customers. Our single distribution layer is tangible compared to the multiple layered distribution model adopted by competitors.
Having said that, we are also present on e-commerce platforms. However our presence or sales volume on these platforms is not as large as some of the competing brands. This is largely owing to our company culture which believes in empowering our customers, shareholders and commercial partners, so that people can do more and be more. But I believe that today the way online functions, it is disempowering consumers and retailers as the same or similar product is being sold at different prices with consumers losing confidence in brands.
Discounted sales on online platforms are a short-term phenomenon. We must remember that online is just a channel for selling and nothing more than that. Currently, because of the 'subsidy' given by online channels for running their businesses and GST difference - the online selling model appears cost effective. Over a period of two years or so, however, the difference between online and offline prices will go away.
As a company we support same price for similar products. Branding and consumer marketing is all about choices. You choose some and you leave some. As we are building a company for the long term, we do not want to resort to short-term practices of offering our products at lower prices online because in the long term, such practices give the wrong results. A number of competitors are already feeling the heat after following such practices. Most importantly, retailers are not favouring such brands as they end up facing the brunt of the problem because of discounted online price policy by a number of brands. Lava International is selling on brand strengths, product and service quality. Those buying our products are doing so consistently - and that speaks volumes about our product quality and pricing.
How difficult it is to build a strong and differentiated brand image in a highly segmented and technology-led category? What are the key brand attributes that differentiate Lava from the others?
Fundamentally each one of us in the smartphone market is selling a Google product. Therefore the software is the same for each of us. Having said that, there are key differentiators that make Lava International stand apart from competing brands. Let me illustrate this with an example. We all know that every airline flies but Indigo flies differently. Similarly, in the smartphone business, be it software or hardware, we are very focused on aspects such as quality, reliability and delivering the right user experience to customers. We make valuable technology available and accessible to buyers with the novelty in product design within a price band. Our devices come with a better camera or sound experience for similarly priced models in the market.
The company plans to invest over Rs 2,600 crore over the next seven years to set up two manufacturing units in the country, in line with the government's Make in India initiative. What advantages do you see in local manufacturing?
As the economy has grown in China, the country has lost the momentum and edge in low-cost manufacturing and as a result it is moving out of China. Meanwhile, India stands a great chance to support and promote low-cost manufacturing owing to its demographic dividend with the availability of a young workforce. This, coupled with a growing market and government initiatives, means that the country is a competitive market for companies to not only build products for local consumers but for the rest of the world as well. India offers great cost and quality advantage to companies looking forward to investing in local manufacturing. Lava International is relying upon these two advantages to take the brand to a global level. We are already the leading brand in markets such as Thailand, ahead of Samsung.
Where will the next phase of growth come from in India?
The next phase of growth for the Indian smartphone market will come from the growing penetration of data particularly in rural markets led by the launch and expansion of 4G networks. The market growth will also be driven by the launch of lower priced smartphones ensuring that more consumers are able to afford smartphones. As a company, we are focused on these two sets of consumers.
Lava has been the second-largest homegrown handset player in the Indian smartphone market for some time now. What does Lava need to do to be able to occupy the top spot?
We believe that culture is all encompassing and the most important factor determining the course of an organisation. Next is strategy. So since the beginning we have been preparing the company for long-term success. We are the only home-grown company with full, end-to-end control on the product. We are well poised to seize the opportunities offered by a growing Indian handset market with strong design, research and development teams. We have put in place an effective single layered distribution system. And we are doing 100 per cent cash sales even when the large brands are going for credit sales. With a close and tighter supply chain, we can boast of genuine sales.
Also Read
How important is the online channel for Lava International? How has your marketing strategy changed with e-commerce platforms like Flipkart, Snapdeal taking centrestage?
With a single-layered distribution system, we are very close to the customer and hence have full control on the product. We are better positioned to communicate product benefits to retailers who in turn pass on the right product information to the customers. Our single distribution layer is tangible compared to the multiple layered distribution model adopted by competitors.
Having said that, we are also present on e-commerce platforms. However our presence or sales volume on these platforms is not as large as some of the competing brands. This is largely owing to our company culture which believes in empowering our customers, shareholders and commercial partners, so that people can do more and be more. But I believe that today the way online functions, it is disempowering consumers and retailers as the same or similar product is being sold at different prices with consumers losing confidence in brands.
Discounted sales on online platforms are a short-term phenomenon. We must remember that online is just a channel for selling and nothing more than that. Currently, because of the 'subsidy' given by online channels for running their businesses and GST difference - the online selling model appears cost effective. Over a period of two years or so, however, the difference between online and offline prices will go away.
As a company we support same price for similar products. Branding and consumer marketing is all about choices. You choose some and you leave some. As we are building a company for the long term, we do not want to resort to short-term practices of offering our products at lower prices online because in the long term, such practices give the wrong results. A number of competitors are already feeling the heat after following such practices. Most importantly, retailers are not favouring such brands as they end up facing the brunt of the problem because of discounted online price policy by a number of brands. Lava International is selling on brand strengths, product and service quality. Those buying our products are doing so consistently - and that speaks volumes about our product quality and pricing.
How difficult it is to build a strong and differentiated brand image in a highly segmented and technology-led category? What are the key brand attributes that differentiate Lava from the others?
Fundamentally each one of us in the smartphone market is selling a Google product. Therefore the software is the same for each of us. Having said that, there are key differentiators that make Lava International stand apart from competing brands. Let me illustrate this with an example. We all know that every airline flies but Indigo flies differently. Similarly, in the smartphone business, be it software or hardware, we are very focused on aspects such as quality, reliability and delivering the right user experience to customers. We make valuable technology available and accessible to buyers with the novelty in product design within a price band. Our devices come with a better camera or sound experience for similarly priced models in the market.
The company plans to invest over Rs 2,600 crore over the next seven years to set up two manufacturing units in the country, in line with the government's Make in India initiative. What advantages do you see in local manufacturing?
As the economy has grown in China, the country has lost the momentum and edge in low-cost manufacturing and as a result it is moving out of China. Meanwhile, India stands a great chance to support and promote low-cost manufacturing owing to its demographic dividend with the availability of a young workforce. This, coupled with a growing market and government initiatives, means that the country is a competitive market for companies to not only build products for local consumers but for the rest of the world as well. India offers great cost and quality advantage to companies looking forward to investing in local manufacturing. Lava International is relying upon these two advantages to take the brand to a global level. We are already the leading brand in markets such as Thailand, ahead of Samsung.
Where will the next phase of growth come from in India?
The next phase of growth for the Indian smartphone market will come from the growing penetration of data particularly in rural markets led by the launch and expansion of 4G networks. The market growth will also be driven by the launch of lower priced smartphones ensuring that more consumers are able to afford smartphones. As a company, we are focused on these two sets of consumers.