NEW DELHI/SINGAPORE: Western tech brands must work harder to understand the local quirks of the Indian market or lose significant market share to strong local, Chinese and Korean brands, according to a leading consumer strategist.
Kunal Sinha, a Shanghai-based expert, is also an Associate Fellow at the Asian Consumer Insight Institute at Nanyang Business School in Singapore, and a mentor at Radicle Advisors Pvt. Ltd in New Delhi.
Writing for Warc, he says that even though a tech-savvy, young, middle-class India offers a lucrative emerging market, particularly as China slows, international technology brands must pay close attention to India's specific market trends to find success.
(For more, including why price point remains very important, read Warc's exclusive report: How Apple and Facebook misread India, but Samsung and Vivo got it right.)
International market leaders such as Apple got themselves into difficulties in India, he says, as competitors such as Samsung and Chinese phone brand Vivo aggressively localised to grow market share.
Samsung now commands market share of 22% in India, while Apple's market share has dwindled to less than 2%.
With their full feature phones, relentless new product drive and innovative marketing, Chinese mobile phone brands are also making deep inroads into the Indian market.
Vivo grew brand awareness aggressively by sponsoring the Indian Premier League, while LeEco partnered with a local film distributor to provide mobile entertainment content in 22 Indian languages.
Price point also remains hugely important for brands – 86.5% of all smartphones are sold in India for less than US$200 where the average annual income is around US$1,600 (less than half of that in China).
International brands must also navigate a complicated regulatory environment, Sinha writes. In India, the laws require at least 30% of the goods sold by a foreign high-tech retailer at own brand stores to be manufactured within the country.
While Samsung now manufactures in India, Apple does not, which makes its products significantly more expensive than the average market price when import taxes are taken into account.
In addition, Western brands should note that during 2015 Chinese smartphone vendors increased their market share in India to 22%, compared to 15% at the end of 2014. Collectively, Chinese brands accounted for 55% of the adspend in the mobile phone category, spending US$185m.
Data sourced from Warc