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Dr. Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Chief Consulting Editor's Desk
Rajita Chaudhuri
Dr. Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Editor-in-Chief
Dr. Arindam Chaudhuri
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“Competing on Price will not get us Anywhere”
Rahul Sharma, Co-Founder and Executive Director of Micromax Mobiles reveals what made The Company click in The Indian Market
Issue Date - 16/06/2011
A number of people harbour hidden aspirations to be able to set up a business of their own one day. And those who do would willfully admit that the initial phases are the most challenging, a fact that ensures that many such ventures die a natural death in the minds of men. That’s where the repertoire of a business maven like Rahul Sharma, Executive Director of Micromax Mobiles, would prove particularly inspiring as well as informative, for he’s one of those leaders who prefer taking up the challenges of setting up a venture and making it a huge success.

Rahul, an engineering graduate from Nagpur University, along with his two other friends (Sumeet Arora & Vikas Jain) joined Rajesh Agarwal’s business of distribution of computer hardware as equal partners in 1991. The shift that most of us better know Micromax for came in 2008. Backed by his enormous technical expertise and buoyed by his experience in the IT and telecom domains across national and international markets, Rahul felt that there were new horizons to reach. After selling computers, software courses and fixed wireless public phones (PCOs), he was convinced that it was time to venture into the already crowded mobile handset market. Soon enough, he managed to convince his partners as well.

When Micromax decided to make mobile phones, the inspiration for its first mobile came from the rural market. The mobile company designed a battery, which could last for 30 days on a single charge and had more than 15 hours of talk-time. The company tied up with vendors in Taiwan and China to manufacture handsets with these specifications and the new X1i, which was priced at Rs.2,249, was an instant hit in the rural market. The unexpected success of the company’s first mobile handset taught the four co-owners important lessons. “If you make something which helps masses in their day to day lives, they will definitely buy it,” says Rahul, adding that there are as many as more than 50 companies selling mobile handset in India but only Nokia has been dominating the market with over 30 per cent. There were features, niches and categories that could be carved out by a new entrant. The fact of the matter is – other players could not see then what Micromax’s founders could. This is exemplified in their positioning statement that says “Nothing like Anything”.

The company decided to develop a brand that could cater to the masses, and yet not compromise on quality or features. “We are not like others, who push their brands. Our company’s strategy mainly focuses on innovating and designing products using latest technology for developing products at very affordable prices,” says Rahul. In just around three years, Micromax has become the largest domestic handset player, according to research firm IDC. And with its presence in the industry, it is already giving stiff competition to its international counterparts. It is now the country’s third-largest GSM mobile phone maker with around 6% market share for the quarter ending December 2010 and is competing with international players like Nokia, Samsung and the fast emerging GTran. “We sell more than one million mobile handsets every month and nearly Rs.1,500 crore worth of phones every year. Competing on the basis of price with Nokia, LG or Samsung will not get us anywhere. Instead, we have created our own categories in the market,” he beams.

Rahul, who likes to mix his own music, felt that the aspirations of tier 2 & tier 3 cities in the country were growing towards BlackBerry-like QWERTY phones. The result: Micromax’s QWERTY phones outsell BlackBerrys by several times. Similarly, he created the Swarovski crystal-studded Bling, which was targeted at women and became a huge success.

Micromax is using the brand’s strength in India to expand to global markets, starting with neighbouring Nepal and Latin America. “We have set up a manufacturing facility in Himachal Pradesh and extended manufacturing contracts with around 10 factories in China, Taiwan and South Korea. (On the supply front), we are in the process of tying up with large-format retail chains as well to tap the next set of customers,” he adds. Nokia targeted the low end Indian customer with utility products. Micromax added style and features to the equation and changed the game drastically. It was helped by the fact that the emerging middle class was seeking top class features at their prices, a fact that Nokia ignored and paid a heavy price.

To promote the brand, Micromax has adopted an aggressive marketing campaign since its inception, relying on the tried and tested passions of the Indian masses. It has used both cricket stars and Bollywood actors (it roped in Akshay Kumar and Twinkle Khanna for promotions) and indulged in a number of campaigns in all kinds of media. “We will be spending around Rs.60 crore in above-the-line activities which will include print, TV and radio marketing initiatives and Rs.40 crore in below-the-line activities this year,” he reveals.

One particular aspect that Micromax seems to have missed out on is app stores, which are becoming distinct competitive differentiators for brands like Apple, Nokia and BlackBerry. Rahul tells us that the company is in the process of bringing in new and different mobile services that will be based on utility apps like location-based social networking or GPS-based tracking systems. Although they have third-party developers who are working to create apps for their handsets, they are working internally to create mobile phone apps.

As more and more competition now moves to carve out new niches & categories, the task ahead for Micromax would be tougher than before. But Rahul doesn’t seem too perturbed, for he seems convinced that Micromax will find a way out of the clutter, just as it found its way into it!

Deepti Singh           
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