 "Micromax's smart foray")
Last month, India's leading home-grown smartphone vendor Micromax entered the smart TV space with the aim to push up its share in the television market to 12 per cent by the end of this fiscal. It had entered the television market in 2012 and now ranks among the top brands with a 10 per cent share.
In June, it also launched a range of air conditioners, the second category it entered after TV in consumer electronics. As the company seeks to widen its range of products in a bid to tap a potentially large but under-penetrated segment, what are the challenges it might have to tackle?
Rajesh Agarwal, co-founder, Micromax Informatics, says the mobile phone market cannot be compared with that of TV which is far more evolved and one where the older generation has greater say as buyers. He points out that the visibility gained in the mobile market - the overall size is about 240 million units - with the volumes it has sold cannot be compared with that of TV. Pointing to the panel market he says, "We have done innovations, but those are not so visible in the market so that people can understand this is the differentiation. We have launched the smart LED TV, also the Canvas series of LED TVs. And as far as smart technology is concerned, we understand it better than most of the other consumer electronics companies because we are a phone company. We understand the data combination, content and we are doing exceptionally well there."
While he admits the smart TV population is "not even two per cent of the market", he hopes Micromax would have an edge as smart technology adoption grows and people start viewing all programming online by connecting TVs to smartphones. "The growth in smart TV is going to be exponential and that of normal LED TV could be linear. We only ventured into LED TV, while CRT was still a big market then. Our customer is youth, who understand technology, so we didn't take the CRT route."
He adds that when Micromax set off with LED TVs, it was one of the pioneers in manufacturing panels on its own while importing the glass. The answer to whether consumer electronics is a cluttered market in India, according to Agarwal, is both yes and no.
"Yes it is a cluttered and competitive market, but I think there is big space for us. We understand our consumer well. If we can provide them what they want, I am sure we can succeed. We aspire for a 10 per cent share in the next two years for any new category." He stresses there is scope for much innovation in any product category, qualitatively as well as in technical areas.
In case of mobile phones pop-up stores can suffice for retail, but consumer electronics products require bigger spaces and prominent locations as well as more investment in terms of after sales. For Micromax, the retail distribution paths for mobile and consumer electronics are different. "The channel which does retail distribution for smartphone is very different from the channel for consumer electronics. Even the sales team is different. We have a different go-to-market approach for different categories."
He concedes that despite the space available for an Indian company, which can understand customer needs and offer right products at the right prices, "getting the equity in the space requires time". On entering other consumer electronics products, Agarwal says, "We'd like to go slow. We are not in a business model where we buy a product from outside and brand it and sell it. Unless and until we have a product and we have an innovation, we would not enter a new segment" Being an Indian company helps understand the government vision. Micromax has three manufacturing plants, and plans to add two more plants in the next one year.
Shubhajit Sen, chief marketing officer, Micromax Informatics, points out that aspects like personalisation of smartphones compared to consumer electronics and separate expectations around longevity are at the heart of the difference in the company's marketing approaches for both categories. In consumer electronics, the focus is on building expertise and brand credibility by doing product reviews, digital interventions, app store intervention, etc. "Once in a while of course we tend to advertise. We ran a campaign which had Harsha Bhogle, Amit Trivedi and Anurag Kashyap. The premise was that this is a TV that the experts trust. It's all about building trust and credibility."
In case of smartphones, marketing is focused on driving consumers, and with consumer electronics it is about building credibility and not being the cheapest, he clarifies. While Micromax has positioned its LED TV as a trusted brand, with air conditioners the focus has been on highlighting them as quality products with low running costs.
Experts agree opportunities are ripe for Indian firms to challenge established MNCs in consumer electronics.
Harminder Sahni, founder and MD of Wazir Advisors, says, "Micromax can become the LG of India. But they need to know what the factors for success in consumer electronics are." At a time when Korean players emerged as world beaters in electronics, he adds, India focused on garment export, textile and low-end exports of IT services because of "wrong policies" of the government. India also seized on opportunities in the car industry, as it turned to exports and opened the doors to multiple brands with all of their models. "In electronics, we missed out. Now, we are trying to control it. With the ecosystem generated here in terms of manufacturing I think brands should come out of India."
For any player, he says, the wrong strategy would be in trying to re-label products and sell them cheaper. For smartphone players, the only initial advantage is their understanding of electronic manufacturing and sourcing. Taking the example of Patanjali Ayurved, Sahni advises companies against creating new brands while adding products to their portfolio.
Anshul Gupta, research director at Gartner, Inc., says, "When Micromax entered the mobile phone market, dual SIM and long battery were not the trend. With these innovations, they created a place for themselves in a cluttered market. They need to find their value proposition and white spaces in consumer electronics. In smartphones, they are still perceived as a brand that offers higher value at a lower price. So they need to create the brand (in consumer electronics) around those value propositions."
Anshul Gupta
Research director, Gartner, Inc.
There are multiple challenges for a new entrant in consumer electronics, in terms of brand positioning, product differentiation and in retail (how to reach out to consumers). When you enter a new product category you need to find out whether there are common customers and you can sell the products in the same channel or you need to create a new channel. Large retail stores at a national level keep all electronic gadgets at the same place. So you might exploit your existing partnership with these retailers to add products. But at times, you also need to develop a new channel. That's where you need to have more resources - money and people - to build your new channel and support the new product category.
In June, it also launched a range of air conditioners, the second category it entered after TV in consumer electronics. As the company seeks to widen its range of products in a bid to tap a potentially large but under-penetrated segment, what are the challenges it might have to tackle?
Rajesh Agarwal, co-founder, Micromax Informatics, says the mobile phone market cannot be compared with that of TV which is far more evolved and one where the older generation has greater say as buyers. He points out that the visibility gained in the mobile market - the overall size is about 240 million units - with the volumes it has sold cannot be compared with that of TV. Pointing to the panel market he says, "We have done innovations, but those are not so visible in the market so that people can understand this is the differentiation. We have launched the smart LED TV, also the Canvas series of LED TVs. And as far as smart technology is concerned, we understand it better than most of the other consumer electronics companies because we are a phone company. We understand the data combination, content and we are doing exceptionally well there."
While he admits the smart TV population is "not even two per cent of the market", he hopes Micromax would have an edge as smart technology adoption grows and people start viewing all programming online by connecting TVs to smartphones. "The growth in smart TV is going to be exponential and that of normal LED TV could be linear. We only ventured into LED TV, while CRT was still a big market then. Our customer is youth, who understand technology, so we didn't take the CRT route."
He adds that when Micromax set off with LED TVs, it was one of the pioneers in manufacturing panels on its own while importing the glass. The answer to whether consumer electronics is a cluttered market in India, according to Agarwal, is both yes and no.
"Yes it is a cluttered and competitive market, but I think there is big space for us. We understand our consumer well. If we can provide them what they want, I am sure we can succeed. We aspire for a 10 per cent share in the next two years for any new category." He stresses there is scope for much innovation in any product category, qualitatively as well as in technical areas.
In case of mobile phones pop-up stores can suffice for retail, but consumer electronics products require bigger spaces and prominent locations as well as more investment in terms of after sales. For Micromax, the retail distribution paths for mobile and consumer electronics are different. "The channel which does retail distribution for smartphone is very different from the channel for consumer electronics. Even the sales team is different. We have a different go-to-market approach for different categories."
He concedes that despite the space available for an Indian company, which can understand customer needs and offer right products at the right prices, "getting the equity in the space requires time". On entering other consumer electronics products, Agarwal says, "We'd like to go slow. We are not in a business model where we buy a product from outside and brand it and sell it. Unless and until we have a product and we have an innovation, we would not enter a new segment" Being an Indian company helps understand the government vision. Micromax has three manufacturing plants, and plans to add two more plants in the next one year.
Shubhajit Sen, chief marketing officer, Micromax Informatics, points out that aspects like personalisation of smartphones compared to consumer electronics and separate expectations around longevity are at the heart of the difference in the company's marketing approaches for both categories. In consumer electronics, the focus is on building expertise and brand credibility by doing product reviews, digital interventions, app store intervention, etc. "Once in a while of course we tend to advertise. We ran a campaign which had Harsha Bhogle, Amit Trivedi and Anurag Kashyap. The premise was that this is a TV that the experts trust. It's all about building trust and credibility."
In case of smartphones, marketing is focused on driving consumers, and with consumer electronics it is about building credibility and not being the cheapest, he clarifies. While Micromax has positioned its LED TV as a trusted brand, with air conditioners the focus has been on highlighting them as quality products with low running costs.
Experts agree opportunities are ripe for Indian firms to challenge established MNCs in consumer electronics.
Harminder Sahni, founder and MD of Wazir Advisors, says, "Micromax can become the LG of India. But they need to know what the factors for success in consumer electronics are." At a time when Korean players emerged as world beaters in electronics, he adds, India focused on garment export, textile and low-end exports of IT services because of "wrong policies" of the government. India also seized on opportunities in the car industry, as it turned to exports and opened the doors to multiple brands with all of their models. "In electronics, we missed out. Now, we are trying to control it. With the ecosystem generated here in terms of manufacturing I think brands should come out of India."
For any player, he says, the wrong strategy would be in trying to re-label products and sell them cheaper. For smartphone players, the only initial advantage is their understanding of electronic manufacturing and sourcing. Taking the example of Patanjali Ayurved, Sahni advises companies against creating new brands while adding products to their portfolio.
Anshul Gupta, research director at Gartner, Inc., says, "When Micromax entered the mobile phone market, dual SIM and long battery were not the trend. With these innovations, they created a place for themselves in a cluttered market. They need to find their value proposition and white spaces in consumer electronics. In smartphones, they are still perceived as a brand that offers higher value at a lower price. So they need to create the brand (in consumer electronics) around those value propositions."
| EXPERT TAKE Demarcate your channels |
Research director, Gartner, Inc.
There are multiple challenges for a new entrant in consumer electronics, in terms of brand positioning, product differentiation and in retail (how to reach out to consumers). When you enter a new product category you need to find out whether there are common customers and you can sell the products in the same channel or you need to create a new channel. Large retail stores at a national level keep all electronic gadgets at the same place. So you might exploit your existing partnership with these retailers to add products. But at times, you also need to develop a new channel. That's where you need to have more resources - money and people - to build your new channel and support the new product category.