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CASE STUDY: How Micromax created a niche for itself and became number #2 smartphone vendor in India?

03/02/2016

Case Study1

What you will find in this Case Study?

1) About Micromax

2) How Micromax Started?

3) Reason for the success of the brand

4) Marketing Strategy

5) Results

About the Company

Micromax is an Indian consumer electronics company headquartered in Gurgaon. The company was established as an IT software company operating in the embedded devices domain; it later entered the mobile handset business. By 2010, it was one of the largest domestic companies making handsets in the low-cost feature phone segment in India. As of Q3 2014, Micromax is the tenth largest smartphone vendor in the world.
smartphone-market-share-India-Q2-2015
Micromax is currently the 2nd largest smartphone company in India. Micromax is a brand which is close to the heart of the youth, and celebrates the vibrancies of life and empowerment.

The Idea

In August 2007, in the powerless village of Behrampur in West Bengal, Mr Rahul Sharma saw an Airtel PCO being power-driven by a truck battery. During night hour, the PCO owner would drag the battery 12 km to an adjoining village on his cycle, charge it there overnight, and drag it back in the morning to Behrampur.

This was the source of inspiration for its first product when Micromax decided to diversify from PCO devices into the business of mobile handsets in late 2007. The company designed a battery that could last for 30 days on a single charge and give 17 hours of talk-time. This was implemented through vendors in China and Taiwan to whom Micromax asked to manufacture 10,000 handsets with these battery specs. Price Rs 2, 249, X1i, was an immediate hit in rural India, and Micromax’s handset business was on its way.
founders
The four founders of Micromax waited for eight years to come together to do business. After college, Mr Jain relocated to the US and joined GE, Mr Arora linked with Blue Star and Mr Sharma moved to an auto components company Bundy Engineering. In 1999, the trio quit their jobs to join Mr Agarwal. They set up Micromax Technologies, an IT education company dealing in e-commerce and embedded technologies.

Business achieved a height in 2007, with sales of 250,000 devices. Then, the mobile revolution took over. Overnight, again, Micromax faced the threat of disappearance. But with its superb management strategy, Micromax converted the threat into an opportunity. It focused highly on product innovation for the low-end, price-conscious user. So, it went rural and it worked. Mr Sharma says: “Customers were willing to pay a premium of Rs200 for the X1i.” Then, instead of manufacturing itself, Micromax on-demand collected its handsets from 12 factories in China, South Korea and Taiwan.

Micromax has invested Rs 100+ crores to set up a manufacturing plant in Baddi, Himachal Pradesh, to ensure its outsourcing model does not cause supply-side uncertainties.
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Reasons for the success of the brand

In the second quarter of 2014, Micromax became the top seller in India leaving Samsung and Nokia behind. So what marketing strategies did Micromax followed?

  1. Clear strategy: Delivering the right value at the right price seems to be the core value of the company’s strategy. It did it by working over P’s of marketing and doing this it has reached to 130,000 retail outlets covering 560 districts across India.
  2. The right funders: On 20 September 2010, Micromax announced that Sequoia Capital and Sandstone Capital Llc had taken minority stakes in the company, following which Mohit Bhatnagar, managing director of Sequoia Capital, joined the company’s board. Madison India Capital also participated in the investment round, which totaled Rs 200 crore ($43million). Earlier Micromax had raised $45 million in January 2010 from TA Associates.

Micromax is not limited to phones only

micromax
Micromax has expanded its reach in Indian homes through its various products like tablet, LED Tv, data card and mainly the mobile phones. Micromax sells around 2.3 million (23 lakh) Mobility Devices every month, with a presence in more than 560 districts through 1, 30,000 retail outlets in India.

Marketing Strategy of Micromax

    1. Sponsoring Indian Cricket Matches: Micromax knew that Indian people love cricket more than anything else. So they took the title from Hero Honda and sponsored a lot of series. With this strategy they reached in the heart of millions of customers. In 2014-15 they paid 20 million Indian rupees to BCCI per match. So they know where and why they are investing that much amount.

micromax cup

  1. Reach to Indian market: Soon after launching their own mobile handsets in the market they started opening their own outlets all across Indian cities. They opened outlets and service centers more aggressively than any other mobile company in India even beating Nokia. Through this they become a household name in all cities and quickly made its own identity.
  1. Right product strategy: Micromax knows what Indians want. Sasta and Tikau. Who can understand this line more than an Indian. And this is what Micromax did. It launched Right product at Right time at Right price. Of course their product’s quality is lesser than that of Nokia and Samsung but the product lives of all companies are same and no one uses a smartphone for more than a year or two.
  1. Promotion strategy: To further increase its visibility, Micromax blasted into the market by advertising through outdoor, online, radio, exchange schemes and promotions via social cause.
  1. Place strategy: By placing the product in popular stores like Croma, The mobile store, Reliance Digital etc., high visibility was assured along with the competitive brands. Tie ups with local distributors for easy availability helped to tap the customers who did not visit the popular stores.
  1. Distribution strategy: For the B2C model, higher margins up to 15 per cent were offered to the dealers, which was higher than the industry average of 6 per cent to 10 per cent. This helped them penetrate the market deeper into the urban markets. In B2B model, where corporate selling was involved, tie ups with major corporate houses saved the margins of the distributors and Micromax could provide the corporate houses a lesser price than the market. Thus, the target market of professionals was reached.
  1. Customer acquisition & retention: Micromax provided better after-sales service and an extended warranty of 2 years; it gained the trust of the customer. Exchange offers played a key role in customer retention.
  1. Use of Social Media: And above all, use of social media made it boss. Engaging with its fans made them trustworthy. Micromax collects feedback from its hardcore users and implements it in their next release whichever is required. Currently, Micromax has over 5.15 million fans over Facebook. The huge success of the brand has been a result of the promotional activities run over the social media platforms. Twitter page has 121K followers that remain active to get superb deals and offers through this page. New launching is promoted via YouTube which currently has 31335 subscribers. Google+ also looks to grab the opportunity of digital marketing with a follower base of 36933.

Micromax, India’s No. 2 smartphone vendor, spends about 10% of its marketing budget on digital media until last year. Now, more than a third of it goes towards online campaigns.

Digital marketing is more personalized, which allows direct interaction between the brand and the consumer, and the response is easily measurable, unlike those on mass mediums like TV, radio or print. Digital marketing offers data that industry experts say put them in a better position to make informed decisions.

Shubhajit Sen, chief marketing officer at Micromax Informatics says “We try to find out what people are talking today and if there is a scope or an insight to convert it into marketing and advertising campaign.” The company spends about 2% of its sales on advertising and marketing. In 2014-15, it posted sales of over Rs 10,000 crore.

  1. #CANGIFTHAPPINESS Campaign on Twitter: Micromax at the time of Christmas launched a campaign on Twitter #CANGIFTHAPPINESS and with every tweet made using #CANGIFTHAPPINESS they donated Rs.1 to CRY, India, a NGO to Support Child Rights. The campaign not only resulted into a great support for CRY but bestowed the mobile company with some great gifts like more impressions, more mentions, more followers and so on.

This campaign had unique hashtag #CANGIFTHAPPINESS, Micromax ran an unique twitter contest for a week, under which for every tweet and re-tweet or shared Facebook posts with the hashtag #CANGIFTHAPPINESS, Micromax decided to donate one rupee to C.R.Y.

More than 11,600 people participated in the campaign that generated 29.5 million impressions during the Christmas week. 2, 38,332 tweets were posted that made the donation amount to reach INR 4, 69,664. Even celebrities and influencers joined this campaign for social cause and more than 2 lakh mentions were generated.

Results

All the mentioned strategies helped Micromax in increasing its market share and it penetrated deeper in the urban markets. It became the largest GSM mobile phone vendor in India leaving Nokia and Samsung behind. However, currently Samsung has again dominated the android market but Micromax with its budget smartphones has been able to hold on a share of 17 per cent in the Indian smartphone market.

It sells more than 1 million mobiles every month. By offering a product line ranging from mobile phones to LED televisions, tablets and data cards, Micromax became the largest Indian mobile company that almost cannibalized the market leader Nokia. Earlier in Q2 2014, Micromax overtook Samsung to become the largest mobile phone supplier in India.

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