The Changing Dynamics of Smartphone Market in India

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Many providers are eyeing to make a mark in India, the second largest smartphone market. But at the same time, the Indian smartphone market is getting very competitive year after year. Hence, a lot of evaluation goes into launching a new product in the market. Established brands as well as new brands, all are vying for their share in the market pie.

In the recent times, we have seen many new smartphone brands entering the Indian market to cut a share in second largest smartphone market. Last year, we witnessed Chinese brands gaining higher market share and playing an increasingly important role in India and the global mobile phone market. Brands like Meizu, Coolpad, Phicomm, VIVO, OPPO, LeEcoZoppo, etc joined Lenovo, OnePlus, Huawei, Gionee and Xiaomi in the Indian market.

They have not only strengthened their operations and increased sales in the indian market but managed to establish their brands. We talked to some major smartphone players in India to know their views about the current mobiles market and their strategies to gain edge in this competitive segment.

A lot of manufacturers are eyeing to make a mark in the second largest smartphone market in the world while at the same time, the Indian smartphone market is getting very competitive year after year. Hence, a lot of evaluation goes into launching a new product in the market. Established brands as well as new brands, all are vying for their share in the market pie.

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Peter Chang, Regional Head – South Asia & Country Manager – ASUS India, states, “At ASUS, our primary aim is designing products that complement the consumers’ lifestyles while adhering to current technological innovations. While launching something new, our dedicated R&D team always tries that these factors reflect in our product portfolio. An example of this is our unique PixelMaster technology that we introduced into our smartphone range, which combines quality software to deliver professional grade images to the consumers looking for enhanced camera performance.”

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Allen Wang, President, Consumer Business Group, Huawei India, comments, “We at Huawei put customers first and evaluate the needs & demands of Indian consumers and based on their feedback, we launch new products. Our aim is to become the most trusted smartphone manufacturer who provides customers with solutions and technology that meets their needs. Our other important focus area is the quality that we deliver. We try to give quality products and that is our key advantage while winning customer loyalty.”

Sky Li, OPPO Global VP, MD of International Mobile Business and President of OPPO India, asserts,Being a new player in the IndianSkyLi market, the first thing on the top of our minds is our new products should satisfy the target audience. The technology infused in the product should reflect our ethos and ultimately give the consumers an end product that meets their demands. We have received an overwhelming feedback from the Indian market for our product quality as well as our after-sales-service. Our phones have been appreciated for their aesthetic design and innovative technology. We have always focused on giving excellent camera experience to our young consumers. The great camera experience and high built-in quality have enabled our brand to stand out in global markets and also in India, and this will continue to be one of our core advantages in the future as well. And this was also the philosophy behind the OPPO F1 Plus launch.”

Pankaj Rana, Business Head, Mobility Division, Panasonic India, states, “User Experience is the key point in our mindPankajRanawhile planning to launch a new product. In fact, to enhance the user experience and suit the varied tastes of the TG, we work hard to meet those features. User Interface plays a major role in improving the user experience and therefore we have phones available with 4 different types of UIs: Fithome UI, Icon UI, SAIL UI & Stock Android UI. Each of these UIs has its own USPs. Customer preference varies over price segments which we are trying to balance with our diverse range of UIs.”

Jerome Chen, Deputy General Manager, VIVO India, “We at Vivo, we firmly believe that the success of an organizationJerome is directly proportional to the customer satisfaction the organization could offer. Therefore, we focus a great deal on consumer insights and our endeavor is to offer impeccable experience through ingenious technology for dynamic and fashionable urban mainstream groups. Today’s youth seeks discerning sound features and the music plays a vital role in the life of Indians. Vivo is the pioneer of Hi-Fi music smartphone. ‘Hi-Fi’ stands for high-fidelity which means high reproduction capabilities of sound and top-performance of the music equipment. ‘Smart’ stands for the intelligent way humans use technology, making man-machine interaction interesting and enjoying. And that is our main focus.”

Kevin XU, CEO – Zopo Mobile, states, “Prior to launching a new product, the first thing that comes to our mind is whyKevin a user would buy the  product. We at Zopo are constantly brain storming on the marketing of a new product, trying to find reasons for customer to buy a new phone. We try to identify the loopholes in the existing smartphone ecosystem, fulfill them and then present them in the market.”

Impact of changing smartphone consumer expectations and behavior on a brand’s strategy

 

Changing consumer tastes and behavior in the market often defines how the providers should design products. The changing consumer behaviour often leads the users to experiment with new brands. These changes have been happening much faster today than before.

Peter Chang of ASUS clarifies, “The Indian smartphone market is quite diverse. In such a fluid ecosystem, consumers have a wide array of choices to reflect upon. New technology is always welcome and brands are quick to adapt to the same while tending to consumer needs. Ever since ASUS entered India, our consumers have demonstrated a perpetual acceptance towards our products. Consumers will be prepared to experiment if brands offer the technology that matches their expectations and needs.”

Allen Wang of Huawei states, “Consumers in the emerging markets like India are today ready to shell out a portion of their income on a smartphone for better features and performance. In the past 2-3 years, Indian consumers have shown the urge to try out new products from different brands, especially in the sub-Rs 15,000 range. They are looking for superior quality products at good price range. Though India is a price-sensitive market, consumers have become more and more aware and discerning and less willing to accept inferior products simply because they cost less. While they are willing to experiment with new brands, it’s the repeat customers that define the customer loyalty towards a brand. We are proud that our brand rating on sales platforms like Flipkart has been as high as 4.1 out of 5 and the number of repeat customers for our products is one of the best amongst online brands.”

Sky Li from Oppo comments, “The innovative nature of the smartphone industry has been steadily gaining momentum in recent years. This has been mainly due to the changing demands and behaviors of the Indian consumers who are now looking for something beyond what’s being offered on the table. Technology savvy consumers are looking for innovative and power-packed devices thus creating a lot of opportunity for new brands. The way consumers choose and buy smartphones is continuously evolving and one needs to keep that in mind in order to appeal to the wider range. As a brand, we feel that our products have been accepted well because of the way we have played on the consumer trend of taking selfies. The current trend indicates that increasingly smartphones are seen as dual-role devices, where consumers are looking for offerings that are a confluence of a phone and a high tech camera, which is exactly what we offer.“

Panasonic’s Pankaj Rana adds, “Indian consumer is very price-sensitive and the emergence of online channel has been pivotal in exploiting this behavior but at the same time the consumer experience has degraded, as most of the brands are not able to match the consumer expectations in terms of performance, quality and after-sales-support. A recent report by Accenture Strategy states that 59% of consumers describe poor consumer experience as the key factor for switching brands. Panasonic brand is synonymous with top class quality, performance and after-sales-service. We have introduced a premium service setup of 70 ASCs & 6 L4s across major locations to provide consumers with quick and reliable solutions. Eventually, I believe there will be 3 or 4 global brands which will sustain the fight in the long run.”

Jerome Chen of VIVO comments, “Consumer behavior continues to be a determining force in the fiercely competitive Indian market. New research shows that an average 18-32 year old now spends over three hours a day with his / her smartphone or phablet screen. Also, we see intense action at the entry level smartphones as consumers are able to enjoy premium features at affordable prices. The fact that there are close to 100 smartphone brands operating in the Indian market shows that consumers are looking for exclusive features in the phone at affordable prices. Recent survey reports show India as the shining point in the otherwise saturated developed markets. This means that India has a tremendous growth potential simply because out of 60% of the user base is still on feature phones, where 70-80 million users are expected to switch to smartphones in the coming years. Our legacy along with our market understanding has made our presence felt in Indian smartphone market, where unbeatable product quality and robust business model will be our differentiating factors.”

Kevin XU of Zopo clarifies, “Yes, we firmly believe that the current smartphone landscape has immense potential owing to the evolving consumer behavior. Unlike the early mobile phone buyers, who were simply brand loyalists, the buying behavior of consumers today is driven by technology, features, aesthetics and pricing. Furthermore, being spoilt for choice, the consumers today upgrade or replace their mobile devices at short and regular intervals, which increase the demand for such products in the market. They are not apprehensive of experimenting with new brands; as such products offer great features and good looks with competitive pricing.”

 A brand’s right channel strategy as a part of an effective marketing plan to play key role

Channel strategy plays a big role in a brand’s success in the Indian market. Some brands launch exclusively online, whereas some others launch exclusively offline. And there are others who launch the same model online and offline. Then there are still other providers who launch certain models online and they reserve other models for offline channel. Most partners express the view that online channel and offline channel, each has its own importance and significance.

Peter Chang of ASUS opines, “Offline and online channels, both are equally important for us. We have consistently used the online strategy to build our presence in the market. In addition to this, we also introduced the availability of our products in offline retail stores and ASUS Exclusive Stores to cater to those consumers who prefer the brick and mortar medium. We started with 100 stores in 2015, and have plans to expand to over 30,000 stores (AES, LFR and MBOs) by the end of 2016.”

Allen Wang of Huaiwei believes, “E-commerce as a retail platform has seen a phenomenal growth in recent years. It has emerged as a viable retail channel in many regions of India where traditional brick and mortar stores still occupy a large chunk of business. The reason in a single word is: price. A core benefit is instantly visible in many products being offered online: the difference between the price offered by a traditional retailer and an ecommerce site. We started selling products in India via Flipkart.com and received phenomenal response from Indian consumers. We also launched our own online platform Honor Store this March. Now we are actively operating in the offline sector and hope to receive the same response.”

Sky Li from OPPO asserts, “We are currently focusing on the offline market which has been doing very well for us. It has been helping us in offering the best services to our local customers. This year, OPPO is targeting 35,000 sales outlets in India in 2016.”

Pankaj Rana of Panasonic comments, “We will continue to do a mix of offline and online sales though offline channel will be the focus area for us. As we are not an only-online brand like some brands; we would like to leverage the strong brand presence of Panasonic in offline channel. However, we cannot ignore the growth of online channel and are expecting that online sales will contribute to 20% of our revenues in the current financial year.”

Jerome Chen of VIVO states, “Vivo presently sells phones only through the retail stores as we wish to connect with our consumers better by providing them the actual look and feel of the product before making their purchase decision. And following our belief, we have invested significantly in our retail network and branding at stores across India. Indian market is highly conducive and India and China share a great deal in terms of complication of the market, population and fast transformation to smartphones, etc so we believe that our success in China can be used here to better serve Indian consumer. Vivo has a robust distribution network in 400 cities, across 28 states and is working with 10,000 retail partners across the Indian geographies.”

Kevin XU of Zopo believes, “Channel partners play a significant role in generating revenue for the company. Although online trading is the widest and one of the most lucrative platforms today, the offline channel partners thrive on the trust of their customers and give a human touch to the entire sales process, which a lot of consumers still yearn for. Having said that, we believe both online and offline sales effort should go hand in hand in order to achieve an all-inclusive success.”

 

Brands are shifting their market focus from Tier-1 to Tier-2 & Tier-3 cities

Markets in metros in India are getting saturated and the competition has become intense. This has made the Tier-2 and Tier-3 cities the most attractive markets. Here too the first entrants and those who offer better features and service are going to be the winners. And customers in these cities also know well what they need and at what price.

ASUS’ Peter Chang opines, “Both Tier-2 and Tier-3 cities offer ample opportunities in India as these are the cities which will drive the next phase of growth. Recently in Guwahati, in a strategic move to reiterate our commitment to the North Eastern market, we announced the availability of our range of products including smartphones, notebooks, and desktops to the region. In the future, we are looking at strengthening our presence in more Tier-2 and Tier-3 cities across the country.”

Allen Wang of Huawei comments, “Tier-2 and Tier-3 cities are of great importance to us because of their rapid development and we will do what it takes to maximize penetration in these markets.”

Pankaj Rana from Panasonic defines, “Definitely! The action is shifting to Tier-2 and Tier-3 cities; they already constitute around 20% of the smartphone market and with the increase in data usage, demand for smartphones is going to increase further in these cities. Currently, 3G devices rule these markets but with the increase in 4G penetration the demand for the 4G devices is bound to increase and we have a very strong lineup of 4G devices already in place to cater to these needs.”

Sky Li from Oppo asserts, “We are targeting a wider audience and thus have been continuously focusing on the Tier-2 and Tier-3 markets. Our endeavor is to provide the best service & quality to our customers.”

Jerome Chen of VIVO adds, “India is an important international market and it is of special significance to Vivo’s global strategy. Our strategy has been uniform from the first day and we have worked aggressively to develop a sound physical retail distribution network with a special focus on Tier-2 and Tier-3 cities. Presently, Vivo has its own strong distribution system in 400 centers, across 28 states. Our service centers have increased to 300 in 2016 from 250 in 2015. We have many dealers in Tier-2 and Tier-3 cities and plan to open more company-owned service centers to ensure hassle-free service to our valued customers.”

According to Kevin XU of Zopo, “At Zopo, we have an array of affordable products that are best suited for the tier 2 and tier 3 markets in India and we will continue to cater to them. At the same time, we offer product differentiation and strategies that will adhere to the urban market wherever required. Hence, our primary focus is the Tier-2 and Tier-3 cities as of now.”

How different brands foresee future trends and their impact on their strategies

Different brands foresee different trends in the coming years that are going to drive the smartphones markets in the coming years. Below are the opinions of different brands.

Peter Chang of ASUS expresses, “As a brand, we work fervently towards introducing products that are contemporary, advanced and are a reflection of the evolving trends. We expect developments and advancements in technology, design, camera, hardware/software specifications etc.; technology is simply getting more advanced at every level and will continue to do so. The future holds great promise for the smartphone industry in India.”

Allen Wang from Huawei comments, “Today, a user can do a thousand things with his smartphone. It’s expected that smartphone usage will reach 2 billion by 2017 in India making it the most popular device for accessing the Internet. Technology at our fingertips has allowed us to do amazing things and take this convenience to the next level. Smartphones are expected to become much closer companions to many people in the near future and this trend is going to influence our future strategies as providers. We believe that fingerprint sensors, breakthroughs in camera technology and sleek looking smartphones would define the future technology. Meanwhile, the commitment for environment-friendly usage will also be considered.”

Ski Li of OPPO opines, “Technology has always been evolving and being a brand that continuously innovates to give the consumers the best experience, we believe that in the coming years, the camera technology will be the defining factor for the consumers to make choice. OPPO has been investing a lot to ensure that we give consumers an unforgettable camera experience. Through our careful designing of both software and hardware, we are constantly working to ensure that every photo taken with an OPPO phone is clear, colorful and bright, to give users’ photos that record their lives, and to surprise them with how much a great smartphone camera is capable of.”

Pankaj Rana from Panasonic states, “In the near future, it will be biometric sensors and higher RAM & internal memory storage. In the coming years, focus will be on Virtual Reality front and on how we can converge 3DTV/projector-like experience on a smartphone and also on the experience with smartphone camera and how it will match with the professional camera’s experience.”

Jerome Chen of VIVO asserts, “With smartphone getting smarter every passing day, we will see blistering technological advancements in the years to come that will drive this segment. There will be a lot of action in 4G as the operators continue to expand coverage. About 40% smartphones being shipped are already on 4G and there are more than 9 crore 4G subscribers, today. And by 2018, 18 crore smartphones are expected to be in the Indian market. Smartphone processors will become as powerful as the laptop processors. Moreover, selfie being the trend, we foresee wondrous advancements in cameras in entry level smartphones as the competition there is stormy. Virtual Reality can be another trend that will captivate the customers substantially and it will be the harbinger of a whole new revolution.”

In this regard, Kevin XU of Zopo says, “As discussed earlier, consumers today make purchasing decisions based on features, aesthetics and pricing. However, the battery life of these smart phones is a major concern amongst others. Having said that, I believe longer battery life, flexible screen technology and intelligent peripheral applications will change the pattern of the market and players that manage to satiate these requirements will seize more market share.”

 

Brands want to reap the benefits of following Make in India initiative

Today, many brands have joined and some are in the process of the joining the bandwagon of ‘Make in India’ to gain the cost-benefits and improve their competitive edge. In this regard, different brands express their views as follows.

Peter Chang of ASUS clarifies, “India remains a very important market for us and will continue to be so. In October 2015, we reiterated this commitment by announcing our role in ‘Make in India.’ In a strategic move to expand our presence, we announced our plans to start the local manufacturing of smartphones in Sri City, Andhra Pradesh, partnering with Foxconn. Thus, we are looking at building our presence and operational capacity to maintain a continual momentum and growth in this space.”

Allen Wang of Huawei adds, “Being the world’s second-biggest smartphone market, India is a strategic and a critical market for us. We are confident on the potential of the India’s smartphone market and will be increasing our investments and product range going forward. We are evaluating aspects related to local manufacturing and are getting excellent updates. We already have an R&D set-up in India which understands what the Indian consumers want and are strengthening our localization strategy through them.”

Pankaj Rana from Panasonic states, “We have set up our factory in Noida and all our new launches are 100% Made in India. With the current government’s impetus on exports, we are sure our overseas expansion plans are in tune with that impetus.”

OPPO’s Sky Li comments, “We have plans to set up a local manufacturing unit in Noida and we are sure that the cost-advantage we gain from that will be helpful in driving our brand ahead further.”

Jerome Chen of VIVO believes, “VIVO is the first Chinese smartphone manufacturer in India to set up a manufacturing unit in line with PM Modi’s globally lauded ‘Make in India’ initiative. VIVO Mobile India invested close to Rs. 125 crore in its first phase of investment in the 30,000 sq. m facility situated in Greater Noida, Uttar Pradesh. The unit caters to the manufacturing and assembling of VIVO’s smartphones thereby creating more employment opportunities and reducing VIVO’s dependence on imports. The manufacturing facility has a capacity to produce 1 million units per month.”

Kevin XU of Zopo confirms, “Bringing in goods through SKD is a convenient option. This way, we can reduce the overall cost which further helps in bringing affordable products to India. This is the currently prevailing trend and we will continue to follow the same.”

Peter Chang, Regional Head – South Asia & Country Manager – ASUS India

“Ever since ASUS entered India, our consumers have demonstrated a perpetual acceptance towards our products. Consumers will be prepared to experiment, if brands offer the technology to match their expectations and needs.”

Allen Wang, President, Consumer Business Group, Huawei India

“We at Huawei put customers first and evaluate their needs & demands and based on the feedback, we launch the products. Our aim is to become the most trusted smartphone manufacturer which provides customers with solutions and technology to meet their needs.”

Sky Li, OPPO Global VP, MD of International Mobile Business and President of OPPO India

“As a brand, we feel that our products have been accepted well because of the way we have played on the consumer trend of taking selfies. The current trend indicates that increasingly smartphones are seen as dual-role devices, where consumers are looking for offerings that are a confluence of a phone and a high tech camera, which is exactly what we offer.”

Pankaj Rana, Business Head, Mobility Division, Panasonic India

“We have set up our factory in Noida and all our new launches are 100% Made in India. With the current government’s impetus on exports, we are sure our overseas expansion plans are in tune with that.”

Jerome Chen, Deputy General Manager, VIVO India,

VIVO is the first Chinese smartphone manufacturer in India to set up a manufacturing unit (in Noida) in line with PM Modi’s globally lauded ‘Make in India’ initiative. The unit caters to the manufacturing and assembling of VIVO’s smartphones thereby creating more employment opportunities. The manufacturing facility currently has a capacity to produce 1 million units per month.”

Kevin XU, CEO – Zopo Mobile

“Although online trading is the widest and one of the most lucrative platforms today, the offline channel partners thrive on the trust of their customers and give a human touch to the entire sales process, which a lot of consumers still yearn for. Having said that, we believe both online and offline sales effort should go hand in hand in order to achieve an all-inclusive success.”