Disconnected brands

Even as the Indian smartphone market is witness to an unprecedented brand rush, veterans LG and Sony are struggling to crack the code

At a recent press event LG Electronics India head Kim Ki-Wan in a candid confession said that their position in the Indian smartphone market has been shamefully poor. He also said that getting the sales and marketing strategy in India right is important to gain market share. It is not just LG that has been sliding down the Indian smartphone lists, Japanese electronics major Sony has too. Surprisingly both firms have managed to win the brand wars when it comes to home appliances (think television, refrigerators and air-conditioners), but not with smartphones.

According to International Data Corporation (IDC), both LG and Sony do not figure in the top five. Surprising that, given the booming segment is drawing new brands in droves and both Sony and LG are old hands in the Indian market. While it refused to comment on the companies' market shares, IDC added that LG shipments have more than doubled year-on-year, but Sony's shipments to India dipped over 90 per cent in the second quarter of 2016.

Sony has said at an investor meet held in Tokyo in June that it will defocus on India in the handsets market, while LG is taking a fresh look at its marketing and branding strategies to come up with an India plan. An email sent to Sony remained unanswered, but analysts point out that the company is moving away from the entry level smartphone category, which used to be its staple business in India.

Adapting to consumer tastes
LG India Managing Director Ki-Wan told Business Standard that "To succeed in India you need to have India-specific products. If we do marketing and sales properly, we will be able to gain significantly," he said.

  LG is moving towards that end. It has started manufacturing smartphones from India. It also launched two smartphones LG K7 and K10 LTE priced at Rs 9,500 and 13,500 respectively, thereby positioning itself in the mid-ranges in terms of price. "We have strengthened our product portfolio with a mix of global as well as Indian insight-based products. Our decision to make smartphones in India will only help us offer products across price points," said a company spokesperson in an email response. LG has also announced the launch of its flagship phone V20 for the Indian markets.

The strategy is to provide an LG phone at multiple price points. Among other smartphone brands attempting to do the same is Asus which wants to have a phone at every price point in the market. "Our primary focus is on strengthening the portfolio by launching a range of India specific products," said the LG spokesperson.

LG and Asus seem to be picking up a few lessons from Chinese handset makers whose brands have flooded the market in the low- to mid-level segment. The companies are also rapidly building up local manufacturing capabilities. As a result, even late entrants like LeEco, Vivo, Oppo and Xiaomi have been able to give players like LG and Sony tough competition.

IDC said that in the second quarter of CY2016, the premium segment ($300+) saw vendor share movement rather than expansion as China-based vendors made a significant expansion capturing around one-third of this segment from only nine per cent a year ago.

"Majority of traction in Indian smartphone market has been in sub-$200, where the presence of LG and Sony was relatively smaller. With China-based vendors flooding the market with high spec-low price devices, competition got intense. While global vendors like Samsung were able to sustain their share, LG and Sony failed to do the same," said Karthik J, senior market analyst, client devices, IDC India.

Digital merchants
The smartphone market has been turned inside out by the burgeoning e-commerce sector. This has resulted in an increasing digital presence of smartphone brands in terms of advertising, discount offers and other consumer interactions. For instance, LeEco grabbed 1.4 per cent market share within six months of its entry in India in January 2016. It sold one million handsets by offering five handsets, primarily online.

But LG is not in a hurry to embrace the online platform just as yet. "Controlling the price online becomes an issue, which then creates problems for offline vendors," said Ki-Wan. The company however wants to highlight their latest technologies and will focus on experiential marketing campaigns where consumers will get to experience the products and technologies first hand. "One such example is the LG Tech Show that we have taken to all important markets this year," said the company.

Faisal Kawoosa, principal analyst for telecom at CMR believes that more than the online presence LG has a huge offline presence which it can leverage for its smartphone segment. "Can LG compete with the Chinese manufacturer? The answer will be no. More than the market share, LG needs to get the mind share first. On a positive front they have a huge offline presence in India because of their home appliance business, they just need to build a portfolio of products and leverage this," he added.