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Chinese Fire vs Indian Thunder

Considering how they made The Incumbents Bleed, both Micromax and G’Five have been Revelations in The Indian Mobile handset Industry. Now they are Increasingly getting in each Other’s Way..

Ages ago, Charles Darwin coined the phrase “survival of the fittest”. His words make all the more sense in today’s era where change happens overnight. And verdicts are given on the victor and the vanquished in much lesser time. In fact, one can safely adapt Darwin’s theory and say that this is the era of survival of the “fittest and the swiftest”. The Indian handset industry, with estimated sales of around 10-12 million units every month, currently has its hands full with a number of players already in the race for a slice of the pie; of course, the larger, the better. But with that perspective, comes the fact that there are always newer players looking to get their foot inside the doorstep. This market, which earlier boasted of only a handful others, was redefined a few years back by a clutch of companies, which made the incumbents bleed, and profusely. Micromax and G’five are two brands, in particular, that emerged from the resultant hostilities to become prominent players in their own right. And while they both have benefitted from attacking the leaders, they are off late increasingly finding themselves in each other’s way. And given the fact that they perhaps are the most acerbic competitors in the market front, 4Ps B&M decided to cover them in this section of Marketers@War..

Micromax established a new business model in India by importing handsets – as there are no duties levied – and selling them in the Indian handset market. Most imports are occurring from China, Hong Kong, Taiwan and other east Asian countries. Off late, the Chinese players have also realised the potential and growth opportunities and entered directly. And Honk Kong based G’Five, irrespective of its lineage (how many of us associate Hong Kong with consumer electronics?), is playing on similar tunes.

Micromax and G’Five are competing in the Indian market on a common principle – offering exceptional value for money to their users and becoming the alternatives to the incumbent MNCs. However, they are not similar in their actual method of approach. Micromax, since its inception, has adopted an aggressive marketing campaign to promote its brand. It has leveraged both cricket and Bollywood (it roped in Bollywood superstar Akshay Kumar, a testimony to its ambitions) and indulged in a number of visibility campaigns. “Our target audience identifies itself with cricket, Bollywood and music. That is why we have been marketing our product around them,” points out Pratik Seal, Head Marketing, Micromax.

On the other hand, G’Five has remained a silent killer in the industry and hardly promoted its products or its brand at the national level. It therefore came as a shock when IDC reported that G’Five has emerged as the largest handset player in India after Nokia for the quarter ending September 2010. Nokia further slipped by around 5% to post a market share of 31.5% and G’Five took the second spot with 10.6%; beating Samsung at 8.2%.“Yes, I agree that G’Five as a brand was not visible in the Tier I cities and metros. But we have been doing enough branding and marketing campaigns in Tier II and III cities,” says Arshit Pathak, Managing Director, G’Five. In the initial stages, the company has been targeting Tier II and Tier III cities, and 80% of sales of G’Five handsets are coming from these cities. After having reached a formidable position, G’Five is now positioning itself in metros and Tier I cities. It is also looking forward to tie-ups with some of the large format retail outlets.

G’Five’s first TVC hit the screens in early January this year. It introduced 15 handsets and other telecom solutions and products. The company, with some 70 people on its payrolls in India, is planning an aggressive media campaign in the next few weeks. Jignesh Maniar, founder and CEO, Onads and Span Communications (creative agency of G’Five) comments, “The TVC was just a precursor to our marketing campaign. Unlike other players, we did not highlight the features, we just communicated that we are a serious player and are going to stay.”

Micromax, on the other hand, has remained focused on its innovative product portfolio and aggressive marketing and branding. Be it Q5, Q7, Bling or the recently launched Android phone, the New Delhi-based company has been investing a handsome amount on the promotion of its products. Some of the TVCs have done wonders to Micromax. Its Q5 phones have redefined the segment, as the QWERTY technology was earlier associated only with business phones. The handset player identified QWERTY with social networking and almost forced every other player in the space to follow suit. Similarly Bling was the first female only phone.

“We have been building the brand Micromax on innovations. In the recent TVC featuring Akshay Kumar, Micromax tries to visualise the future where we can do anything with our phone,” said National Creative Head, Lowe Lintas Amer Jaleel. Micromax recently launched the Android phone and received advanced bookings soon after the TVC hit screens. It created a microsite for the promotion of the Android phone, where a buyer was asked to share his experience of buying the first Android. More than 50,000 people shared the experience and made the innovative campaign a huge success. There are around 40 models in the Micromax kitty, which cater to every handset user, irrespective of age and sex. However, the company is targeting youth between the age of 18-24 years, as they are the ones who are always excited about the handsets and frequent upgrades. The handset major has associated itself with some major Bollywood events to win the hearts of this target audience. It is also sponsoring the Bryan Adams show to be held in Delhi on the eve of Valentine’s day.

Micromax is very particular when it comes to choosing brand associations and sponsoring events. Despite the IPL’s huge success, Micromax did not sponsor this gala festival of cricket unlike its competition, as it wanted to associate the brand with serious cricket, being a serious player in the market. However, Micromax has been associated with several Test and one-day series where team India was participating. Lately, G’Five has also realised the potential of cricket to get brand recognition. Just before the ICC Cricket Word Cup, G’Five will launch six TELLY series handsets which will have the capability to receive free to air analog TV signals, so that users can watch matches aired by Doordarshan on mobile screens.

G’Five has remained a strong price warrior in the segment. The company offers dual SIM handsets with a camera at a price tag of Rs.1200, fulfilling the needs of people at the lower rungs of the pyramid. The company has its own manufacturing facility back in Hong Kong, and therefore has more room to play as far as pricing is concerned. Besides, it is cutting costs immensely by keeping its marketing budget low, a benefit it is passing on to buyers to undercut the competition. However, Micromax has a huge marketing cost, including the fees of Bollywood couple Akshay and Twinkle in brand promotions. But they have still managed to sell handsets at prices starting from Rs.1250. Interestingly, the company refuses to give the Bollywood power couple the status of brand ambassadors. Seal asserts, “We do not believe in having a brand ambassador, though we have Bollywood celebrities who are used in our communication.”

Retail and distribution network are also key factors that decides the sale of handset. Micromax has a stronger chain of distributors and retailers. It has set up a three tier distribution network in India comprising more than 60 state and regional distributors across 23 states. Besides, the company has 800 local distributors, who in turn distribute products to retail outlets selling to end consumers. It has a total retail presence in at least 80,000 stores. G’Five, in comparison, has a retail presence at 40,000 stores and is planning to add 20,000 in the next few months. But G’Five has a strong global presence in 14 countries. In some countries including Nigeria, Bangladesh & Pakistan it is among the top five handset players. It is also highlighting its global footprint to market the brand in India. Meanwhile, Micromax is now going global, after its India success story, and has now expanded its foot prints in Nepal, Bangladesh, Sri Lanka and UAE.

Micromax could be the better bet in the upcoming year if its Rs.8 billion IPO is successful. It can use the proceeds to ramp up its marketing spend considerably. G’Five, on the other hand, has just shown a spike in the Indian mobile sweepstakes so far, and has to prove that it is more than a one time champion. But, it has the manufacturing muscle typical of Chinese players. It can go on adopting a push strategy to tap virgin Tier II and Tier III markets, but brand value will matter much more if it has to penetrate Tier I. With their value propositions along very similar lines, it is the brand equity that will decide the true winner in the long run. And in that aspect, Micromax does have the lead, though it must show its ability to leverage it for the numbers, an aspect where G’Five has proved a winner, at least once.