Indian Smartphone Makers Compete with Chinese Brands

GURGAON, India - July 20, 2016 - PRLog -- An aggressive marketing push from the Chinese entrants in the Indian smartphone market has left the home-grown brands to compete for their esteemed positions. The move by China-based android phone manufacturers has sparked a debate over the sharply rising business costs for local players. As a result, Indian smartphone makers are compelled to try and match the marketing endeavours of their Chinese counterparts, thus squeezing their already wafer-thin margins.

The new entrants from our immediate neighbourhood generally focus upon the offline market more than the online one. They pay more channel commissions for promoting their products, as much as 10 percent at times. On the other hand, Indian handset makers operate on 2-3 percent margins, facing tough competition from the China-based players who are willing to sacrifice margins.

Branding Opportunity in Retail and Media

Tapping shopkeepers in retail for branding opportunities has proved to be an effective tool to ensure presence throughout all retail outlets. In some cases, the brands pay family-owned stores anywhere between INR 30,000 and 31,00,000 to redesign their shop fronts and carry their brand's name. Previously, this was done for free. However, since on-store branding helps a lot in prompting customers to make purchases, the costs have now increased.

Besides, thanks to the money being flooded in by Chinese brands, the rates for key brand placements in popular TV programs has risen by as much as 40% within a year. Indian players are hence being forced to match up, despite the sluggish smartphone sales in the January-March quarter.

To them, the method adopted by the Chinese seems unsustainable owing to the high trade margins and advertising spends. It is, however, helping all China-based manufacturers gain a foothold in the Indian market. When the first quarter ended this March, Chinese handset makers had a 22% share of smartphone sales, which is further estimated to go up to 25 percent.

Doubled Ad Spending for Greater Market Share

Due to their doubled ad spending on media, they gear up for a greater share of the fastest growing global smartphone market. This year, one such brand has already spent INR 10 million on marketing in the initial quarter and may spend more in the quarters to come. For instance, Vivo is looking to spend nearly INR 100 crore on marketing and advertising this year, and that does not include the expense on their IPL sponsorship.

Aggressive marketing by China-based companies have left limited options for their Indian counterparts. Indians are required to either match up, or opt for targeted advertising and marketing in tighter budgets.

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