Our marketing budget for FY15-16 is around Rs 200 cr: Solomon Wheeler, Lava
The mobile handset market in India is very competitive. India being home to around 1.3 billion population, around billion of them use mobile phones which makes us the second largest country in terms of number of mobile phone users after China (1.2 billion). Growth has been escalated especially with advent of technology in terms of performance, accessiblity and affordability. As a result, unlike many other electric appliances, approximately 80% users change their mobile phones on average every two years. With this, the handset makers continuously strive to stay tuned with latest developments and at the same time making it accessible at affordable rates.
Domestic handset maker Lava is one such brand in the mobile handset industry which is working towards making valuable technologies accessible. With a strong focus on R&D for product design, Lava has been continuously churning out great products with an aim to empower people to do more and be more. It firmly believes that the customers lie at the heart of any strategy and as a result has always spoken about the real benefits of its products and services. It works with a single layer distribution model and has one of the largest service centre networks.
Lava has robust plans for 2016. The brand is looking forward to strengthening its design and testing operation in the country. Lava recently joined hands with Google to introduce the 'Indic Keyboard' which will be pre-installed in all Lava manufactured smartphones.
The brand firmly believes that in current times, it is very important to reduce spill over & measure the effectiveness of campaigns across all mediums to be able to react and improve in real time.
Adgully gets into a conversation with Solomon Wheeler, Vice President and Head - Marketing & Communication at Lava
Adgully (AG): How would you define the Indian cellular market and where do you position yourself there?
Solomon Wheeler (SW): Indian Cellular Market has witnessed a sea-change this year. According to a survey by Gartner, global smart phone sales grew 15.5 percent in the July-September period to 353 million units, with Android accounting for more than 298 million. Majority part of this growth was under emerging markets such as India, where sales have grown by 18.4 percent compared with 8.2 percent for mature markets. Additionally, the Indian handset market is highly competitive with multiple brands operating both in the online & offline space. In the current year, on an average 3 phones were launched every day. Brands really need to have a very strong understanding of the consumer needs & competition landscape to offer products across all price points.
Lava believes in making technology accessible for the masses by bringing in value for money products. Currently, we have a 10% market-share overall. We saw more than 100% revenue growth in FY14-15 over last financial year.
AG: Would you say you have gone from a market penetration strategy?
SW: Lava’s single layer distribution model is unique to this industry and is one of our biggest strengths. Herein, more than 1400 distributors pan India are directly managed by Lava. It helps us control the market pricing and prevents any kind of infiltration. It also allows us to ensure that Lava products are available at one price across the country both in offline & online space. Our focus currently is more on the offline retail channel and we currently sell from more than 1lac retail outlets across India. It has helped us win trust of channel partners – retailers & distributors alike.
In terms of geographic strengths, Lava is number 1 amongst home grown brands in multiple states across India. North India including Uttar Pradesh has traditionally been very strong for us closely followed by west & south which have huge potential in the smart phone segment.
That said, India is a focus market for Lava and we are looking forward to an accelerated growth in this market over the next three years.
AG: You have a presence on multiple price points. What is your pricing strategy?
SW: Lava’s product portfolio starts at INR 900 and goes up to INR 12000. Our endeavor always is to design & develop products basis consumer needs and these change as we move up the price ladder. Pricing ultimately balances the product benefit being offered to the consumers and that is done keeping the competition landscape in mind.
AG: What would be your core target group?
SW: Lava is a mass brand with phone available from INR 900 to INR 12000 and products are designed basis consumer needs in each price segment. Also, as per reports, India is set to become the world’s youngest country with 64 per cent of its population in the working age group by 2020. Having said that, the brand's core TG is consumers in the age group of 15-30, with the median at 24-25 years, at their first job, looking to do more, professionally and personally.
AG: What in your view are Lava's key differentiators in a reasonably cluttered market?
SW: Lava focuses heavily on product design – not just in terms of form factor, but in terms of software as well to enhance the user experience. We are the only homegrown brand that has a R&D center in Bangalore & China with a team of more than 600 people working in product design. Teams collaborate seamlessly to exchange technical and qualitative inputs and create quality products, along with testing at several stages to deliver the ultimate customer experience in its category. R&D center designs & develops the product and manufacturing is then done in India. This backward integration not only allows LAVA to bring Innovation but also gives better quality and experience to the customers.
Another attribute that sets us apart from the other brands is our product quality & after sales service which is much better; and failure rate, as perceived by the trade (retailers and distributors) is much lower than all other Indian brands. Recently, Lava was declared as the most trusted smart phone brand in product quality and after sales service amongst all Indian brands by Silicon India.
Thirdly, we are the only company in India with 100% single layered distribution as against all our Indian competitors that have multiple layers.
AG: What share of voice do you have in various media?
SW: Our marketing budget for FY 15-16 is upwards of Rs. 200 crores, and is deployed across a balanced of media mix. Our strategy is to focus around building brand imagery and Television therefore becomes our lead medium. We focus on cricket a lot as the sport cuts through across all SEC classes and geographies. This is amplified on digital wherein we focus a lot on driving positive conversation by engaging with influencers and consumers on social media channels. Outdoor is used to reinforce product campaigns in key cities across India. On the whole, Lava brand maintains a 15% share of voice across these mediums.
AG: Talking specifically of digital, what role does it play in your marketing strategy?
SW: Digital medium plays an important role in the consumer’s purchase cycle, be it awareness, influence or purchase itself. A lot of research happens online even if a consumer buys the product from offline retail. It is therefore imperative for us to include digital as part of the media mix and have an integrated approach. Depending upon the brand & communication objective, digital gives us the ability to customize our approach in reaching out to the desired target audience with customized/ contextualized messages. While on one hand we use social channels to drive engagement & build affinity towards the brand, on the other hand we use search & display advertising to influence consumers who are in the active purchase cycle.
AG: How has the year 2015 been for you?
SW: We’ve had a fantastic run in 2015. We successfully crossed USD 1 billion revenue mark in FY 14-15, registering a growth of over 100% over FY13-14 and this is nothing short of a milestone for us. As mentioned we have become the number 1 Indian brand in multiple states such as Himachal Pradesh, Jammu, Tamil Nadu, Uttarakhand and Uttar Pradesh.
With respect to International business, as per recent reports, Lava became the number 1 brand in Thailand in the last quarter.
Earlier this year, we also began our partnership with Google with Android One which has seen good response in the market. Our partnership with Google will help us deliver valuable technology to the consumers.
We also commissioned manufacturing operations in India this year and plan to invest INR 26.15 billion in a phased manner to scale it up to have an annual production capacity of 216 million phones.
AG: What is your future product roadmap?
SW: We can’t comment on this at the moment. At an overall portfolio level, all our devices are best in class in terms of design and quality. And with a very strong market research team we understand how consumer needs change across different price points. Our products will be in line with their needs & expectations. Also above a particular price point, most of our portfolio will comprise of 4G handsets going forward.