On Karbonn

7/29/2019 On Karbonn

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Introduction

Karbonn mobiles started late in the telecom revolution in

India entering the mobile handset market in 2009 only.

But within the first year, Shashin Devsare, Executive

Director, Karbonn Mobiles has taken quantum leaps to

make his company a major player in the semi-urban and

rural market.

With over 5 million mobiles sold till date, Shashin aims to

take on whole India replete with confidence.


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Formation Of Karbonn

Two Indian telecom majors have joined forces to trigger

the revolution - UTL and Jaina.

The UTL Group is a multi division telecom group with anannual turnover of Rs 1600 crore and over 2000

employees.

Headquartered in Bangalore, it is a leading Indiantelecom powerhouse with interests that span across

manufacturing, services and distribution.


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The Jaina Group is a reputed distribution house with

interests in telecom and consumer durables.

Headquartered in Delhi, the company has represented, with

distinction, prominent brands such as Nokia, Samsung,

Siemens, Panasonic and Philips (LCD devices) as regional

or national distribution partners.

Currently the national distribution partners of HTC and

Motorola (operator business), Jaina is also the preferred

distribution partner of Microsoft.

UTL and Jaina now present Karbonn: phones that feature

the absolute latest trends in mobile telephony, at incredible

prices.


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Target Customers

The multimedia phones of Karbonn address theurban markets which have begun to saturate.

Handsets equipped with dual SIM cards andbattery are clearly targeted at the rural markets.

Though rural markets are billed as the nextfrontier for mobile telephony.

Consumers therefore prefer phones with morethan one SIM card for better connectivity.

Theres a huge market in the rural areas andeven the replacement mobile market is on ourradar, Devsare says.


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Therefore, Karbonn made special

posters and banners, etc for the ruralmarket

Consumers want more and more

features at as low price points as

possible. Karbonn Mobiles knows this.

The company offers customers the

same features and quality that they

get in global brands at an affordable

price range of Rs1,700 to Rs6,500.

This actually is the sweet spot inwhich the bulk of handset sales

happen.


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Karbonn's package:

Value at an affordableprice. "Good cameras,

music and video players

at the right price.

This strategy, backed by

the IPL deal and cricket

stars Virender Sehwag

and Gautam Gambhir,

has boosted the brand.


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Brand-building and compelling products arenecessary building blocks of the business, but

they can come to naught if the retail strategy isfaulty.

Mobile handsets are sold through over a millionmulti-brand outlets in the country.

Apart from the brand pull, the retailers hard sellhelps the customers decision. And a retailer willpush that companys brand which offers it thebest profit margins.

To make sure that the Karbonn brand does notlag behind others, the company is offeringextremely competitive margins to dealers.


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Apart from that, Karbonn Mobiles intends to

have five to ten exclusive Karbonn stores in all

the major states of the country by the end of this

financial year.

About 25 models are currently being offered by

the company, including touchscreen, dual SIM,and multimedia in both GSM and CDMA spaces.

Going forward, the company plans to launch

three to four models every month across

different segments and price points


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Impact on Existing Players

Market leader Nokia has lost almost 12 per cent market share sincelast year. Nokia dropped the prices of a large number of its featurephones and has launched a range of feature-packed phones in theRs 5,000-8,000 category.

It has also launched a number of models targeted at the fast-

moving sub-Rs 3,000 category, where the churn is the maximum.Even in the smartphone category, it has bring out its low-cost qwertyphone C3, which is priced around Rs 5,000-6,000. Soon, Nokia willalso launch two dual sim phones, a category Indian brands haveexcelled in.

Another player, Sony Ericsson, has thrown in the towel by vacatingthe low-end handset market.

The attack is forcing MNCs to change their strategies. After losingthe game in the low-cost basic phones segment, they are nowoffering mid-level handsetsaimed at urban youth and executivesat very attractive prices.

Some of them have even launched new ranges to retain customers.


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Strengths and Weaknesses of

Karbonn MobilesStrengths Weaknesses

Low costabout 30 per cent

cheaper than MNCequivalents

High on features, some of

them better than global

modelsWill offer latest features like

3G, Android at a fraction of

MNC costs

Quality, design often not up

to the mark, use primitivesoftware

Servicing could be an issue,

most companies are

primarily importersGovernment rules on

components, materials could

erode price advantage


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Major Challenges faced by the

company Naveen Mishra, IDC's Lead Analyst for Telecom

believes the biggest problems lie not in brand-building orin distribution but in how the brands develop. "They have

limited intellectual property, not latest operating systems,with little work on user interfaces. So while these brandswin the price and features war, they will lose out at thetop of the market, he says.

Some of the (homegrown) phones do not meet thequality and technology standards that are required in thelong run, phones with dubious quality standards andwhich use hazardous materials will not succeed.


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The government is finalising a set of benchmarks formaterials (the plastic, metals and key components) usedin cellphones to ensure they are non-toxic and hazard-

free. This is a move to rein in unbridled imports anddumping from China.

Adherence to these rules will add to the costs of theIndian companies. With wages rising across China, theircost advantage could erode too.

These Indian brands have proved that it is possible todent the market share of international brands. But thenew entrants are also employing a very expensivestrategy. Whether it will yield results in the long term isyet to be seen, says Future Brandss Santosh Desai.

But then, Indian companies have always found a wayout. This is not likely to be an exception. Moreimportantly, consumers are lapping up all offerings.

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