The past couple of years have seen global smartphone giants stepping up their game in the Indian market to claim the top spot. The companies are adopting an India-focused strategy and are bringing more budget-friendly phones to the market.
According to the International Data Corporation (IDC), the smartphone market in India registered a sharp year-on-year decline of 50.6 per cent in the second quarter of 2020, recording 18.2 million units, as the country remained under lockdown through the first half of the quarter. The online channel accounted for a market share of 44.8 per cent but declined by 39.9 per cent year on year in unit terms due to lockdown restrictions on the delivery of electronics as well as severely limited stock for most of the quarter.
Smartphone manufacturers are tweaking their current business practices to drive growth. A look at the marketing and innovation strategies of major players, and their impact on the market…
BBK Electronics owns the top Chinese smartphone brands including Oppo, RealMe, Vivo, Oneplus, and the recently launched Iqoo, another brand that will focus on the Indian market. According to Counterpoint, in 2019, the BBK Group dominated the Indian smartphone landscape with a 37 per cent share, compared to 28 per cent of Xiaomi. Although the brands owned by BBK compete with each other, the group has segmented them in such a way that each company gets its space to grow and synergies are harnessed. OnePlus, for instance, shares manufacturing facilities with Oppo, while Oppo’s Android-based operating system, Color OS, is shared with Realme. Innovations by one company eventually are leveraged by other group companies as well.
In 2019, the segmentation was crystal clear with OnePlus focusing on the premium end, Vivo being more mainstream across price points and Realme taking the main competitor Xiaomi head on in the entry-level and mid-price segments. However, in 2020, there has been some deviation from this strategy. OnePlus has now entered the mid-price segment taking on Vivo and Oppo with “Nord”, while Vivo and Oppo have arrived in the premium space with “X50” and “Find X2” series respectively. Further, Realme has entered the mid-price segment with X3 and X3 Pro devices in India.
Interestingly, Chinese manufacturers follow the strategy of launching sub-brands for already established products. For instance, Oppo, which became popular in the offline market, launched Realme with a focus on the budget category and online market. According to market reports, very few consumers have information about BBK Electronics being the parent company of these three smartphone brands. That apart, aggressive pricing, big online sales and marketing push drove BBK’s growth in the market.
OnePlus started out as an affordable brand but subsequently with every release, the average selling price of the OnePlus hardware increased slightly and in no time it transformed into a premium player. Over the years, OnePlus has diversified its product catalogue, from launching two phones annually to four in a year. In addition, with Realme 5 Pro, it beat Xiaomi to get a 64-megapixel camera in a quad-camera configuration first to the market. Almost every Chinese brand has an assembling unit in India, from Xiaomi to OnePlus, which makes it very easy for them to offer the phones at the price they do, as they don’t have to pay import taxes, for instance. Besides delivering massive RAM and storage capabilities, smooth UI with OxygenOS and best display, the massive investment in 5G is one more addition to BBK’s business strategy in staying ahead of the curve.
In the second quarter of 2020, the Indian smartphone market was led by Xiaomi with a 29.4 per cent market share. However, Xiaomi’s overall shipment volume fell by 48.7 per cent year on year, falling to 5.4 million units in the second quarter of the year.
The key driver of Xiaomi’s market in India is its flash sales model under which a specific number of products are allocated for each sale. The company focuses on cross-selling services and products to users through its innovative retail concept, which involves direct online sales. Further, opening offline stores was a major marketing strategy of the company. Xiaomi used a three-pronged strategy for building its offline business, which involved large format retailers, Mi Preferred Partner stores, and its own Mi Home stores. That apart, Xiaomi followed the hunger marketing strategy, a plan that focuses on human emotions, when it entered the Indian market in partnership with Flipkart to promote its value-for-money smartphones. This tactic not only created a sense of scarcity but also made customers curious about the product release, adding to the urge to buy the phone.
Xiaomi India sells its high-end smartphones at a cost as low as 30 per cent-50 per cent than its rival brand. The company used the Redmi brand for some of its lower-budget smartphones before hiving it off as an independent brand. It launched Pocoas, an affordable gaming smartphone with extremely high-end specifications similar to those offered by Samsung and others.
In 2020, Xiaomi fine-tuned its overarching strategy from smartphone artificial intelligence of things (AIoT) to 5G+AI+IoT and next-generation super internet. The company plans to invest around RMB 50 billion over the next five years in 5G+AIoT to double down on its lead in the field.
Samsung, the only major non-Chinese player in the country, has already begun to gain ground and a surge in anti-China sentiment in India following the recent border clash in June 2020. Samsung has launched seven new smartphones since June 2020, three of them under Rs 10,000, including its cheapest Android offering at around Rs 5,000. The company overtook Vivo to secure the second position in the Indian market and registered shipments of 4.8 million units, in the second quarter of 2020.
Samsung has been actively collaborating with tech and web giants such as Google, Microsoft, Netflix and Spotify to diversify its offerings and drive its growth. It worked with Google to optimise video-calling features in its smartphone. Google Duo will be natively integrated into S20, which might help Samsung’s and Google’s fight against Apple’s Facetime app. Also, Samsung expanded its partnership with Microsoft to enable Galaxy smartphones and Windows PCs to share data in real time. This collaboration will only continue to expand through its gaming partnership with Xbox.
The company is focusing on the convergence of 5G, AI and IoT, which will form the basis for its Galaxy devices. In April 2020, Samsung acquired Tele World Solutions to address the need for end-to-end support in delivering network solutions.
The Apple bandwagon
Apple’s entire product line is based on loyal consumers that return to the brand again and again. According to SellCell study, less than 10 per cent of iPhone users intended to switch brands after upgrading their smartphones.
In 2020, Apple started bundling iPhones with AirPods and has announced plans to launch iPhones twice a year from 2021. AirPods, Apple Watches and iPhones could all contribute to Apple stock’s upward move in the next few months. The company has created a deeper level of integration between its hardware and software for all its devices. Also noteworthy is the between Apple and Samsung where Samsung satiates the demand of the iPhone manufacturer for OLED displays, flash memory and chips.
According to IDC, Apple continued to dominate the premium segment with a market share of 48.8 per cent, followed by Samsung and OnePlus. The iPhone 11 and iPhone XRare are said to have captured 28 per cent shipments in the segment.
Apple uses a minimum advertised price (MAP) retail strategy. MAP policies prohibit resellers or dealers from advertising a manufacturer’s products below a certain minimum price. Apple’s cheapest product prices are usually mid-range, but the products’ hardware and user interface are designed to provide a lot of value for the price, keeping profits high.
China tussle and the pandemic
The Covid-19 pandemic followed by anti-China sentiments in India on account of the border dispute have severely dented the dominance of Chinese brands in the domestic market. The total market share declined for the first time in almost two years. That apart, the recently announced Aatmanirbhar Bharat initiatives by the government have pushed Chinese smartphone vendors into the eye of the public storm.
Recently, the government banned two of Xiaomi’s apps that have been instrumental for the company in engaging millions of users. Consequently, the company is looking to tweak its India strategy, which has been in line with its global strategy. Product launch strategies, festive season planning and investment plans have been on hold for almost a month now, after the border clash. Vivo, Realme, Xiaomi and OnePlus are reportedly focusing on expanding local production and highlighting make in India in their advertising campaigns and product packaging.