After a thorough analysis of case facts and industry research, we recommend the following strategies for Micromax. These measures will help the company diversify its product lines and launch new smartphones to gain market share in a highly competitive space.
According to consumer insights quoted by the Internet and Mobile Association of India (IAMAI) and IMRB, the local language user base is growing at 47 per cent yoy, and reached 127 million in June 2015.
Micromax’s market share remained constant at 14-15 per cent across top Tier1/Tier2 cities. Launching phones that have user interfaces in local languages will help increase its market share. The top languages that cover over 80 per cent of India are Hindi, Telugu, Bengali, Marathi, Tamil, Kannada and Gujarati. Another user insight is that, apart from camera and storage, Tier1/Tier2 cities prefer smartphones for online video and game features.
Micromax could differentiate with exclusive pre-installed games as part of the OS. This could be a low-cost differentiation, consistent with the company’s strategy.
Mobile connections are expected to grow by about 50 per cent to 307 million in 2017. Major growth will come from rural India (as urban areas are nearly saturated). But the rural regions still face a power crisis and witness frequent load shedding and power fluctuations. So, battery life is a critical parameter for differentiation in these markets.
Technologies that can be adopted after deep study and R&D are e-Ink technology, lithium air-breathing batteries, fuel cells, and transparent solar chargers. These are detailed here .
Extension into wearables
According to industry research, wearables are the fastest-growing segment in the smart devices market. Volume sales of wearables have grown by 134 per cent so far in 2016 (to 239,300 units). Wearables are expected to post a CAGR (compounded annual growth rate) of 51 per cent and reach 1.9 million units by 2021.
Micromax can extend into smart watches, modular devices and measurement accessories, and explore acquisitions/partnerships with incumbents such as Intex. This will generate volumes and build a ‘Micromax community’, providing synergy with its existing smartphone business.
Build and position Micromax as the phone for ‘Bharat’ by building a community around its products. Marketing can be enhanced by featuring video testimonials on the company’s website, Facebook, Instagram and Twitter accounts. Co-creation of marketing content will spread positive word of mouth and build loyalty, recall and affinity.
Possible marketing campaigns: “Join the Micromax family” or “Micromax: phone India ka”
Customer testimonials through – #mymicromaxstory, #meµmax
Basic smartphones for low-end consumers can be marketed through exclusive partnerships with neighbourhood kirana stores. India has 12 million such street-corner grocery stores, translating into one kirana store for every 100 Indians. Such a strategy will be disruptive and provide immense reach.
Although there may be the risk of accountability, systems and processes can be designed and set up to mitigate such risks.
Micromax needs to meet the challenge of hiring and retaining top talent, given that several top management hires have left the company. It needs visionary leadership to scale up and a functionally strong middle management to enable this transformation. Here’s a list of potential hiring hubs:
Expert management consultants
Management consultants with 10-15 years experience aspiring to move to the helm of organisations and prove their mettle. They will bring a clear vision for the company in terms of value investments and growth opportunities.
Business schools – lateral hires and Rotational Leadership Programmes (RLP)
Business schools such as IIMs and ISB churn out energetic young managers, brimming with new ideas and looking to execute strategies and drive change. These could be the change agents who can catapult Micromax towards achieving its Vision 2020.
Lateral hires with the relevant experience can take up middle management positions. Youngsters can be inducted through a formal RLP that would make them cross-functionally capable to progress in the organisation.
Academicians and research fellows
The practical expertise brought in by 1 and 2 can be further augmented by the latest in research and technology. Such technology and consumer insights could be brought in by partnering with academicians and research fellows.
The company needs to conduct a functional analysis and identify need gaps. For example:
a) Defects in production: To correct this, a quality control system with latest technology from theory and practice would have to be set up and experts hired laterally from the field.
b) Customer sales and post-sales service, where middle management candidates from the industry need to be hired to corporatise customer management at Micromax.
A formal organisational structure with high accountability and transparent performance measurement should be the retention strategy for Micromax.
While small firms can grow without an organisational structure or division of responsibility, scaling up requires a formal management framework where leaders act as balancing agents across downstream functions. Also, a flat organisational structure is proposed so that innovation is unrestricted and happens across the company.
Decision hierarchy and performance management
To ensure that the organisational structure functions, a decision hierarchy and ownership need to be clearly defined in terms of who owns the P&L. Further, lower down the organisation, clear distribution of activities, scope and impact need to be established.
Implementing balanced scorecards has enabled organisations to achieve not only higher retention but also a transparent measurement, performance management and reward system. Productivity is likely to increase by up to 20 per cent with this implementation.
(The first runners-up are doing their PGPM at Indian School of Business)