Suman Pokhriyal )-How do you see the growth ofthe overall handset market in India?
Mr. Hari Om Rai )- India is the second largest mobile handset market in the world after China and is poised to become an even larger market with unit shipment of 208.4 million in 2016 at a compound annual growth rate (CAGR) of 11.8 per cent from 2010 to 2016 (Source: Research & Markets). The mature Indian mobile consumers’ increasing preference for high-end handsets and the younger demographics’ desire to use mobile Web 2.0 technologies could see the market revenues soar to INR 350.05 billion in 2016. With end users’ need for converged devices and original equipment manufacturers’ (OEMs’) increased adoption of Android, the mobile handset-smartphone combination is emerging as the future growth engine of the telecom industry. The next wave of consumer demand will come from the mid-level smartphones priced below Rs 12,000. This category is expected to clock 60 million units and Rs 370 billion by value by the end of FY 2014-15, with a healthy growth of 22% over FY 13-14 in terms of value and 14% in terms of volume.
Suman Pokhriyal )- What is your (Lava Mobile) strategy to sustain in thatscenario?
Mr. Hari Om Rai )- Lava has been very successful with the entry and mid-segment phones so far on back of strong products, healthy distribution set-up and a continued focus on service. Our focus now is to also acquire a larger pie of thepremium smartphones market in India and that requires us to position ourselves differently and take off from the platform established over the last four years of our journey.
The strategy is focused on the 4Ps and service. We strive to offer innovative and relevant products at the right price. We have a robust pan India distribution network that ensures product placement at last mile outlets. And we communicate to different consumers through different mediums to promote and position the products relevantly. Besides, we are working on improving our service strength. At present we have a 900+ service center network and have taken few strategic initiatives to further strengthen this, results of which will come out in the next few months.
With the three pillars — product, service and brand, we feel that Lava would continue to increase its market share in the overall category, and especially in the smartphone category.
Suman Pokhriyal )- How did you build a strong customer base in spite of the fact that other major player dominating the Indian market?
Mr. Hari Om Rai )- Over the last four years, Lava has invested strongly in 4 most important factors for long term success – product, distribution, service& processes; and continues to invest in them.
Currently, Lava is the only Indian handset player that has a complete in-house R&D set-up in China to control the design & development of products. Some of the products that we launch are completely developed in-house (and EMS Manufactured) that gives us a much better control on quality. Recently launched Iris Pro 30 has been completely designed & developed in house. Fusion App on Google play store has been developed by Lava R&D team. This application has more than 15lac downloads on the Google play store with an average user rating of 4.4 on 5.
Lava also has an extensive testing facility wherein all products undergo stringent testing as per industry norms & standards to make sure that the product quality is unmatched.
In terms of distribution, Lava has a single-layer distribution model, one not chosen very often by competitors as it is tougher to implement, wherein over 900 distributors pan-India are directly managed and controlled by Lava. This helps in maintaining price stability across all markets, leading to high trade & consumer confidence.
In terms of service, Lava works on Sales & service distribution (SSD) model and offers a multi-tier service structure to customers through more than 900 service centres pan India.
Having created this differentiation in the value chain, Lava has been offering a strong proposition to the consumer and that has helped the company build a strong customer base so far.
Suman Pokhriyal )- How do you plan to create a persuasive value proposition in the Feature Phone & E-tabs segment?
Mr. Hari Om Rai )- LAVA has a wide product portfolio that encompasses tablets, feature phones and smart phones having various models in bar and touch form factor at multiple price points to suit all categories of consumers.At Lava we believe in learning from consumers. With a strong market intelligence & research team, we have deep dived into consumer needs, preferences and usage behavior. Lava’s in house R&D team based out of China translates this into a strong product proposition for the consumers.
In feature-phone segment, Lava has different series of handsets namely Spark, KKT and ARC that provide compelling value proposition to the customer in the entry level price range. Spark series is targeted at the customers who wish to carry stylish, beautiful & premium bar phones. For those who like to have long battery back-up with loud sound, Lava has KKT series of bar phones. ARC series is the range of highly affordable bar phones in the range of Rs 800-Rs 1200 for the consumers in tier 3 towns and rural areas.
In tablet market, Lava will be focusing aggressively on enterprise space this year,and will come up with products comprising both Android and Windows tablets. The aim is to provide technically superior products and customized solutions to fulfill the commercial needs across sectors like pharmaceuticals, retail, auto etc. We are also partnering with companies who have developed applications catering to accounting needsof SMBs customers.
Suman Pokhriyal )- How do you plan to handle your competitors, which are also cateringto the same market segment?
Mr. Hari Om Rai )- The organization is focusing on the key pillars that would be required for increasing the market share. To elaborate, the product team is focusing on producing great quality products across all price segments; the service team is working on improving the service level. From the communication and the brand side, we want to take off from the platform that we have established over the last four years. The associations with IIFA and KBC are some of the initial steps to uplift the brand imagery for the new segment of smartphone customers.
With focus on these three pillars — product, service and brand,along with an in house R&D center & an already differentiated distribution structure, we feel that we would continue to increase our market share in the overall category, and especially in the smartphone category.
Suman Pokhriyal )- Any specific target segment you are focusing on? What is your USP?
Mr. Hari Om Rai )- Lava is focusing on today’s youth given that India’s demographics are undergoing a transformation. Entry level professionals and students in the age group of 18-30 years form our core target segment. This segment of consumers is more aware, connected and conscious and is the potential smartphone buyer. They aspire to have a device that has unmatched performance, great looks and do not compromise on the quality.
Having said that, our focus remains on both tier 1 and tier 2 &3 markets as a major chunk of consumers in the tier 2 & 3 markets are now shifting to smartphones.
The USP of Lava products is the value proposition we offer – products with best in class performance at the right price. To bring in differentiation in our products, we focus on providing reliability through design, component and process quality, and offering superior sensorial experience in touch, sound & sight.Lava is the only Indian handset player that has a complete in-house R&D set-up in China to control the design & development of products basis inputs that are shared by a strong in house market intelligence team. On distribution side, we are highly focused on last-mile delivery to our customers for which we have built a diverse 900+ strong distributor network pan India with presence at over 63000 retail outlets.
Suman Pokhriyal )- Tell us about your plans to enter the tablet market.
Mr. Hari Om Rai )- We are already present in the tablet market with a wide product portfolio and are focusing aggressively in enterprise space this year coming up with a product portfolio comprising both Android and Windows tablets. As far as growth is concerned, We are looking forward to double our revenues from tablets and IT products in FY 2014 from FY 2013.Given the strong focus on the Enterprise Space, we have a dedicated Sales and Services Team for providing end-to-end customized solution to their commercial needs. In a very short span of time, we have built associations with some of the top organizations listed in Forbes.
Education sector will also remain a key focus area for our tablet business in the year 2014. In 2013, Lava spearheaded the education initiative in Meghalaya, wherein24000 Tablets were delivered to students under the Government’s Student Digital Learning Scheme. With our tablet offerings we are committed to facilitate customized products to harness the potential of digital learning in India. The objective is to empower the students with e-learning tools by offering them an access to a whole new view of their world right at their fingertips.
Suman Pokhriyal )- What are your future plans till March 2015?
Mr. Hari Om Rai )- Lava was founded with a vision – to empower people to do more and be more. Lava continues to do that at every touch point consistently – consumers, employees, commercial partners and shareholders. The entire value chain is working with ownership to achieve the long term goal i.e. to become a global consumer from India.To be able to achieve this, we need to build great products to delight the consumers. And a step in that direction will be to start manufacturing in India. In this respect, we are currently planning and evaluating a JV with a renowned manufacturing company. However, timelines cannot be committed as of now.
On the brand side, we are focusing on ATL, digital and BTL mediums as part of a 360 degree effort. BTL activities enhance Lava’s visibility at the retail level where the final purchase decision is made. These include aggressive deployments of Shop in Shop counters, signage, POS (point of sale) material, so on and so forth. Digital medium on the other hand, acts as a very strong influencer for our TA. We have started with a complete revamp of the corporate website, building engagement on social media platforms and visibility through SEM & SEO. We will also have a continuous presence on TV & shall take a strategic call on different properties that we will keep on associating with at regular intervals of time. For instance, Lava has been partnering with IIFA for last two consecutive years and had associated with KBC last year.
Talking about service, we have invested in establishing a 900 plus strong service center network and are continuing to invest in this. To be able to become a global consumer brand from India, consumer satisfaction with after sales service is of prime importance to us. We have taken some strategic measures in this regard, the results of which shall be visible in the coming months.
On the revenue side, Lava has big plans for the Indian market. We ended FY13-14 with business worth Rs. 29,000 million and are targeting Rs. 60,000 million for the current FY.