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Micromax: Preparing for the Chinese Invasion*

CASE STUDY, STRATEGIC MANAGEMENT
ET Cases - GSMC, 15 Pages

Case Preview

Micromax: Preparing for the Chinese Invasion

 

Founded in 1991 by Rakesh Agarwal (Rakesh), Micromax Informatics Limited (Micromax) got into handsets business only in 2008 based on suggestions from Rahul Sharma (Rahul). Rahul had joined Micromax along with two other friends and classmates, Sumeet Arora (Sumeet) and Vikas Jain (Vikas) in 1999 (as equal partners of Rakesh). Rahul had convinced his friends to get into the mobile handsets business. They had set an undated ambitious target that someday they would have a turnover of INR10 billion1. They learnt early on that if they understood customers’ needs and offered what customers wanted at prices that were affordable, the customers would buy Micromax mobile phones. This philosophy had made them number one in tablets, number two in the smartphone market and number three in the overall handset category. While they had set their sights at dethroning Samsung (the Number one player) in India, the Chinese companies like Xiaomi, Huawei and Gionee had started looking at the Indian market for growth. The flash sales of Xiaomi in India have been fairly successful. Rahul was wondering what Micromax would have to do to fight the
Chinese invasion.

Introduction to Micromax

In 1991, Rakesh founded Micromax Informatics as a distributor of computer hardware. The company sold software, telecom services and computer hardware to organizations even a decade after being joined by his three friends. In 2008, they diversified into mobile handsets and they have not looked back since then. According to Counterpoint Research’s Q3 2013 Market Monitor, Micromax is the tenth largest handset supplier globally (Exhibit I)...........

 



1 “Can Micromax make the leap from Indian to global brand?,” Business Standard, June 23rd 2014

Teaching Note Preview

Micromax: Preparing for the Chinese Invasion

 

Synopsis

This case focuses on the marketing strategies of Micromax Informatics Limited (Micromax). Micromax was founded in 1991 as a distributor of computer hardware by Rakesh Agarwal. In 1999, he was joined by three of his friends and based on a persuasive suggestion of one of them (Rahul Sharma), got into the mobile handset business in 2008. This was based on an observation that even the most popular brands of handsets launched by global players did not fully satisfy the local needs. Micromax was good in spotting opportunities based on identification of their potential customer’s unmet needs. Despite not having a manufacturing facility then or a large research and development setup, they have introduced various innovative solutions in the market. The handsets were manufactured in China. The small R&D team had its focus on product engineering and design. They first focused on the rural markets and then proceeded to the urban markets. They have been innovative in the handling of channels and also in their communication and brand building efforts. They used celebrities and sports (cricket) to help in building their brand. They are very strong believers in the value for money proposition. Keeping their ambitions and realizing their strengths they also launched their products abroad. Micromax is currently number one in tablets, Number two in the smartphone market and number three in the overall handset category in India. However, with the launch of Chinese mobile  phones in India, the stage was set for Chinese companies’ growth in India.

The case provides students with an opportunity to understand how entrepreneurial marketing orientation helps organizations scale up and how organizations with good consumer insights and marketing strategies can become major players in the market and achieve their growth dreams.

Teaching Objective

The objective of this case is to elucidate the importance of integrated marketing strategy. This case can be used to:

  • • Discuss how consumer insights can help an organization to come out with innovations that can help differentiate your product
  • • Illustrate how a small new entrant (Micromax) with an entrepreneurial spirit of seeking opportunities can help it grow from INR6.5 billion (USD128 Million) revenues in 2008-2009 to estimated INR75 billion (USD1.25 billion) by 2013-2014
  • • Demonstrate that, even if an organization is not the first-mover in a technology oriented industry, it can still become a dominant player in the market
  • • Highlight some of the marketing mix decisions taken by Micromax which helped them become one amongst the top two players in the Indian mobile handset and tablet market.

 

Case Positioning and Setting

The case is beneficial for discussions among students pursuing a postgraduate degree in management and who are interested in Marketing, Entrepreneurial Marketing, International Business and International Marketing. The course where this case has high relevance is Marketing.

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Abstract

This case focuses on the marketing strategies of Micromax Informatics Limited (Micromax). Micromax was founded in 1991 as a distributor of computer hardware by Rakesh Agarwal. In 1999, he was joined by three of his friends and based on a persuasive suggestion of one of them (Rahul Sharma), got into the mobile handset business in 2008. This was based on an observation that even the most popular brands of handsets launched by global players did not fully satisfy the local needs. Micromax was good in spotting opportunities based on identification of their potential customer’s unmet needs. Despite not having a manufacturing facility then or a large research and development setup, they have introduced various innovative solutions in the market. The handsets were manufactured in China. The small R&D team had its focus on product engineering and design. They first focused on the rural markets and then proceeded to the urban markets. They have been innovative in the handling of channels and also in their communication and brand building efforts. They used celebrities and sports (cricket) to help in building their brand. They are very strong believers in the value for money proposition. Keeping their ambitions and realizing their strengths they also launched their products abroad. Micromax is currently number one in tablets, Number two in the smartphone market and number three in the overall handset category in India. However, with the launch of Chinese mobile phones in India, the stage was set for Chinese companies’ growth in India.


The case provides students with an opportunity to understand how entrepreneurial marketing orientation helps organizations scale up and how organizations with good consumer insights and marketing strategies can become major players in the market and achieve their growth dreams.




Pedagogical Objectives


The objective of this case is to elucidate the importance of integrated marketing strategy. This case can be used to:


  • Discuss how consumer insights can help an organization to come out with innovations that can help differentiate your product

  • Illustrate how a small new entrant (Micromax) with an entrepreneurial spirit of seeking opportunities can help it grow from INR 6.5 billion (USD 128 Million) revenues in 2008-09 to estimated INR 75 billion (USD1.25 billion) by 2013-14

  • Demonstrate that, even if an organization is not the first-mover in a technology oriented industry, it can still become a dominant player in the market.

  • Highlight some of the marketing mix decisions taken by Micromax which helped them become one amongst the top two players in the Indian mobile handset and tablet market



Case Positioning and Setting


The case is beneficial for discussions among students pursuing a postgraduate degree in management and who are interested in Marketing, Entrepreneurial Marketing, International Business and International Marketing. The course where this case has high relevance is Marketing.




* GSMC 2016, IIM Raipur


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- Case Study
- Teaching Note (**ONLY for Academicians)
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