price-conscious India, the world’s second-largest smartphone market,
Apple is trying hard to safeguard its premium brand positioning while
attempting to sell its iPhone devices using ingenious offers. In the
past few quarters, Apple has launched a series of promotions that mark a
departure from its previous one-strategy-fits-all-markets model.
Apple, it is a changed India stratagem in 2013,” said Manasi Yadav,
senior analyst, mobile phones and tablets, at research firm IDC India,
“With this, Apple recognizes that India is an important geography,
acknowledges its potential, and brings a more focused approach to the
market,” said Yadav.
last year, Apple was an outlier in the Indian smartphone market. The
gap between iPhone sales and sales of market leader Samsung’s smartphone
devices or even the cheaper, slick models of aggressive local vendors
such as Micromax, looked unassailable. Samsung and Micromax each sell
almost 10 times more smartphones than Apple. In Figure A, Apple sales fall in the “Other” category.
Apple sales fall in the “Other” category.
stagnating sales in saturated Western markets and the promise of India — the country’s smartphone market grew by 227% year-on-year in the 3Q of
2013, according to research firm, IDC — has goaded Apple to do a
serious rethink on its approach. This past year has marked a
turnaround, and the iPhone’s growth has been striking in the past
quarters. Apple has rumoredly even set itself a 2013 annual revenue
target of $1 billion, though it is projected to just fall
short of that.
To be sure, Apple’s anticipated India target is only a fifth of its own revenues in the neighboring China market.
it has been a marked shift for Apple as it drives different sales
strategies and distribution models. The phone maker’s biggest challenge
in India is to lock more consumers into its ecosystem, said Tarun
Pathak, an analyst at research firm CMR’s India telecoms practice. “They have to widen distribution and reach in smaller cities by
shortlisting 20-30 such high potential markets and build a critical mass
device maker is certainly expanding its footprint and is pushing sales
of iPhones and other products in smaller Indian towns. It has moved
away from selling phones solely through operators and has widened its
distribution network beyond its own Apple stores.
this year, Apple introduced an equated monthly installments (EMI)
scheme in India. EMI has been a tried-and-tested strategy by marketers
of a variety of products and services to hook young Indians.
the past quarters, Apple launched a series of promotional tactics that
are not intended to look like price-cuts yet are designed to achieve the
same results. Buyback offers, zero-interest financing schemes, and dropping
prices on older models (such as 4 and 4s) has seen iPhone sales volumes
Apple’s recently-launched, so-called “cheap” iPhone 5C took India by
surprise with its not-so-cheap pricing of about 40,000 rupees ($660),
Apple launched bundled offers with carriers. Apple’s 5C is “too highly
priced” for emerging markets like India, aiding iPhone 4s to be the
volume driver, research firm Gartner said in a recent report.
came back with an aggressive trade-in scheme in India where customers
can trade in the iPhone 4 for cash discounts on the new iPhone 5C. In
front page advertisements in leading newspapers, Apple offered a minimum
13,000 rupees (over $200) discount as trade-in value.
There is a delicate balance of premium branding with customer-friendly pricing. Apple’s branding has made
the iPhones coveted even though competitors offer the same or better
features for far less. Bringing down prices would directly impact
Apple’s brand equity.
is a conscious strategy to not make the iPhone too affordable as it
would make it lose its premium appeal and dilute the brand image,” said
Yadav. So, introductory prices on its phone models remain
definitely needs to convert more smartphone buyers to iPhone users, especially since it does not have a choice of devices at the entry level
which its competition offers. According to Pathak, “While currently iPhones sell to
hardcore Apple loyalists who want to upgrade, the phone maker realizes
that the way to grow volumes and market share is through gaining buyers
amongst new segments.”