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Micromax vs The Chinese Incursion

CASE STUDY, MARKETING MANAGEMENT
Institute of Management Technology, Ghaziabad, 10 Pages
AUTHOR(S) : Gunjan Malhotra, Assistant Professor and Aniruddha Saladi, PGDM Student (batch 2017-19), Institute of Management Technology, Ghaziabad

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Micromax vs The Chinese Incursion

On August 22nd 2017, Micromax Informatics Ltd., the Indian mobile handset company declared they will be aiming to regain their volume leadership by winning 10% market share over the coming months.1 According to Rahul Sharma co-founder of Micromax, they plan to achieve it by strengthening their position in INR9,000 to INR15,000 category. He said that they would focus on what Micromax is known for – ‘Innovation at the right price’.2 Established in 2000, Micromax entered the mobile phones market in 2008 with an innovative business model. It catered to the budget phones segment of the market with their price efficient phones and even introduced features that made their product stand out – like Micromax Hue, a phone which offered 30 days of usage (battery backup) on a single charge.3 In 2014, it took Samsung’s place as the market leader but, lost their market share to Chinese brands beginning from 2015, when Oppo, Vivo, etc., entered India. Micromax planned to regain their footing in the Indian mobile handset market by the end of 2017. What was the innovation and the business plan that helped Micromax to succeed? How did the Chinese brands defeat Micromax? What could Micromax do to regain its glory? What were its plans to stay afloat in the ever-growing Indian mobile handset market?.........

Exhibits

Exhibit I: Growth in the Total Telecom Subscribers in India (in million)

Exhibit II:Market Shares of Mobile Phone Manufacturers, India 2014

Exhibit III(A): Micromax Market Share (from 2009 to 2016)

Exhibit III(B): Micromax Smartphone Market Share

Exhibit IV: Growing Market Share of Chinese Mobile Handset Companies in India


1 “We will get our volume leadership back: Micromax,” http://economictimes.indiatimes.com/tech/hardware/we-willget-our-volume-leadership-back-micromax/articleshow/60172749.cms, August 22nd 2017 (Accessed Date: August 31st2017)

2 “Micromax Canvas Infinity: Ups the ante in Rs10,000 segment”, http://zeenews.india.com/gadgets/micromax-canvasinfinity-ups-the-ante-in-rs-10000-segment-2037179.html, August 28th 2017 (Accessed Date: September 3rd 2017)

3 Ravi Sharma, “Micromax Canvas Hue, a phone with 30-day battery backup,” http://www.gadgetsnow.com/mobiles/Micromax-Canvas-Hue-a-phone-with-30-day-battery-backup/articleshow/45855056.cms, April 1st 2015 (Accessed Date:August 25th 2017)

Teaching Note Preview

Micromax vs The Chinese Incursion

Synopsis

Micromax entered the smartphone market in India in 2008 and by 2013 became the market leader, defeating Samsung. Its point of differentiation was the cheaper manufacturing costs owing to the production process being outsourced to China, which in turn allowed it to price its products lower than the other companies in India. It also catered to the budget buyers segment of the market, who make up the majority of the mobile users in India. But from 2015, it had steadily lost its market share to the same Chinese companies who entered the Indian market with their own mobile brands, namely Oppo, Vivo and Xiaomi. They now own above 51% of the mobile phones market in India and Micromax has had to become a market follower from being a market leader.

Micromax now plans to stay afloat by expanding into other sectors like the TV market, into the service sector, and focusing on growing in countries like Russia where they’re already one of the market leaders. Micromax’ CEO Rahul Sharma in a recent interview stated that they plan to hit both budget and premium sectors this year and have a concrete plan for succeeding..............

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Abstract

Micromax entered the smartphone market in India in 2008 and by 2013 became the market leader, defeating Samsung. Its point of differentiation was the cheaper manufacturing costs owing to the production process being outsourced to China, which in turn allowed it to price its products lower than the other companies in India. It also catered to the budget buyers segment of the market, who make up the majority of the mobile users in India. But from 2015, it had steadily lost its market share to the same Chinese companies who entered the Indian market with their own mobile brands, namely Oppo, Vivo and Xiaomi. The Chinese companies now own above 51% of the mobile phones market in India and Micromax has had to become a market follower from being a market leader. What was the innovation and the business plan that helped Micromax to succeed? How did the Chinese brands defeat Micromax? What could Micromax do to regain its glory? What are their plans to stay afloat in the ever-growing Indian mobile handset market?

Pedagogical Objectives

The case will help students to:

  • Understand the various strategies Micromax has used in the past and what it had planned for the future
  • Assess the change in the consumer behaviour with respect to the increasing telecom market
  • Apply various frameworks to assess the companies in the market
  • Make recommendations as to the different strategies Micromax can implement

Case Positioning and Setting

The case is suitable for use in MBA and executive MBA courses on Marketing Management and general management. It analyses the issues faced by Micromax during its comeback with innovation in Indian mobile handset markets. The case is intended as an opportunity for students to understand the concept of product differentiation; market challenger or leader or follower; segmentation, targeting and positioning strategies; increasing trends in foreign investment and how they affect the existing businesses.



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