Micromax was once the leading smartphone brand in India, but it has since fallen on hard times. So in this case study we will find out Why Micromax Failed? Started in 2000 as an IT company, Micromax decided to enter the Mobile market in 2008 and by 2010 it became the one of largest mobile phone company in India. In 2013 Micromax became the market leader with a total market share of 22%, In 2014 it maret share was 19% still good, But in 2015 it fell to 15% and became Less Than 2.8% in 2018, and according to statista as of July 2020 it market share became just 0.71%
What the hell happened that the company which was one the largest player in the market suddenly boiled down to having less than 1% market share in 2020.
Why on witnessing declining market share year-on-year Micromax leaders couldn’t do anything. Why Micromax failed? We will answer all these questions in this case study.
We will also talk about what is Micromax doing these days. How it has relaunched itself
Mobile Market In India in The Early 2000s
To understand the rise and fall of Micromax, we need to understand the mobile market in India in the early 2000s.
In the early 2000s, the mobile market in India experienced significant growth and transformation. During this period, mobile phones were becoming more accessible and affordable, leading to a massive increase in mobile phone ownership across the country. Several key factors contributed to the booming mobile market in India were:
Market Liberalization: In the early 1990s, Indian Government started economic reforms and liberalization policies that encouraged foreign players to enter in various sectors, including telecommunications. This opened the doors for international mobile phone manufacturers such as LG, Nokia, BlackBerry, Samsung etc. and service providers to enter the Indian market.
Falling Prices: With increasing competition and advancements in technology, mobile phone prices began to drop steadily. Affordable phones and basic models became accessible to a wide range of consumers, including those in rural areas.
- Network Expansion: Telecommunication companies aggressively expanded their networks to reach remote and rural areas. This expansion significantly increased the availability of mobile services across the country, attracting more customers.
Micromax Entering The Mobile Market - The Rise of Micromax
Seeing this tremendous growth in the Mobile and Telecommunication sector. Micromax which started as an IT company in the 2000 decided to enter the mobile market space in the year 2008.
The initial growth of company was so good that by 2010, it became one of the largest companies making low-cost mobile phones in India.
By 2013 and 2014 it became the largest player in the Indian Market. Not only that by 2014 Micromax was the 10th largest vendor in the world. It even the became first Indian company to sell in Russia.
In 2013 Micromax’s had a total market share of 22% becoming the market leader. Now lets see the factors that led to Micromax’s tremendous growth and then we will finally figure out why Micromax failed ?
What Made Micromax Market Leader
Some major reasons that witnesses the success of Micromax in the Indian Market are:
Affordable Pricing: Micromax offered smartphones at competitive and affordable prices, catering to the price-sensitive Indian consumer base. This strategy helped them gain a significant market share, especially in the budget and mid-range segments.
Localized Approach: Micromax understood the Indian market well and adopted a localized approach in terms of product features and marketing. They offered regional language support and tailored their smartphones to suit the needs and preferences of Indian consumers.
Extensive Distribution Network: Micromax established a wide distribution network across India, reaching even the remote areas. This allowed them to make their smartphones accessible to a larger customer base.
Strong Branding and Marketing: Micromax invested in branding and marketing campaigns to create a strong brand presence in India. They collaborated with celebrities and used various promotional strategies to increase brand visibility.
- Partnerships and Tie-Ups: Micromax collaborated with various telecom operators and online retailers to offer bundled packages and exclusive deals, increasing their reach and customer base.
- Indian Identity: As an Indian brand, Micromax resonated with the sentiment of supporting domestic products, which appealed to patriotic consumers.
Now it seems like Micromax did everything right. Then the question is why Micromax failed ? Micromax even focused on the “Localized Approach” offering regional language support and extensive distribution network. So, finally lets find out out why Micromax failed ?
Why Micromax Failed ?
Micromax was once the leading smartphone brand in India, but it has since fallen on hard times. There are a number of reasons for Micromax’s failure, Some of the major reasons why Micromax failed are:
- Intense competition: The Indian smartphone market is highly competitive, with established players like Samsung, Xiaomi, and other Chinese brands dominating the market. Entering such a competitive landscape can be challenging for any new or existing company.
- Pricing and Value Proposition: Micromax faced difficulties in differentiating itself from the competition in terms of features, quality, and pricing. Many Chinese brands offered smartphones with better specifications at competitive prices, which made it harder for Micromax to attract customers.
Lack of Innovation: Over time, Micromax found it difficult to keep up with the rate of technical development and failed to release cutting-edge products that could rival those of other companies in terms of design, functionality, and performance.
Software Updates and Support: Regular software updates and post-purchase support are essential for retaining customers. Customers lost faith in Micromax since its track record in this area was not as good as some of its rivals.
Offline vs. Online Retail: Micromax’s distribution plan wasn’t able to keep up with the increasing trend of online smartphone sales. Many Chinese brands concentrated on selling only online in order to lower operating costs and provide cheaper prices.
Chinese Market Dominance: Micromax’s market share was greatly damaged by the emergence of Chinese smartphone brands in India. Chinese businesses made significant marketing investments, offered aggressive pricing, and responded fast to customer demands.
The Major Reason Why Micromax Failed ?
The above were some reasons for Micromax’s failure. BUT of all the above mentioned reasons the major reason Why Micromax failed was Competition from Chinese brands.
Chinese smartphone brands, such as Xiaomi and Oppo, entered the Indian market and offered high-quality products at low prices. Micromax was unable to compete with these brands.
How and Why Chinese Players Dominated Indian Markets ?
I won’t take much time as this is really a long answer and it will go out of our topic. So, quickly speaking here are the main reasons:
Competitive Pricing: Chinese smartphone brands entered the Indian market with competitively priced devices. They offered feature-rich smartphones at affordable prices, catering to the price-sensitive Indian consumers.
Extensive Product Range: Chinese brands have a wide range of smartphones, targeting different price segments and consumer preferences. This diverse product portfolio allowed them to address various customer needs effectively.
Focus on Value for Money: Chinese brands focused on providing value for money by offering advanced features and specifications at lower price points compared to their competitors.
- Online Sales Strategy: Chinese brands embraced the online sales model, partnering with e-commerce platforms to sell their smartphones. This allowed them to reach a broader audience and reduce distribution costs.
- Strong Supply Chain Management: Chinese brands optimized their supply chain management, ensuring a steady flow of smartphones to meet the high demand in the Indian market.
What Is Micromax Doing Now ?
1n the year 2020 Micromax once again started its operations, i.e it made a comeback in the Indian mobile industry with a new sub-brand “IN”. Micromax’s “IN” sub-brand focuses the lower-income class of India making cheap smartphones.
Micromax is also selling TWS earbuds under the brand name “IN”, calling them Airfunks. You can see the images below. Apart from this Micromax is still selling the Keypad mobile phones for people who have very little money or are not comfortable with the new technology.
You can find more about Micromax history in detailed at Wikipedia.
Another good thing Micromax managed to bring a revenue of ₹22,368.79 crore (US $2.8 billion) in the FY 2020. Micromax still employs more than 20,000 people.
According to VCcircle, nearly 80% of Micromax stake is held by four promoters Rajesh Agarwal, Vikas Jain, Rahul Sharma and Sumeet Arora. TA Associates,Sequoia Capital, Sandstone Capital and Spreadtrum are some the key stake holder in the company. (Please note that this isn’t latest data and now the stake holding pattern may vary)
Yes, Micromax is still functioning. In 2020 Micromax made a comeback in Indian Mobile Sector with a sub-brand called “IN”.
The major reason Why Micromax failed was Competition from Chinese brands. Chinese smartphone brands, such as Xiaomi and Oppo, entered the Indian market and offered high-quality products at low prices. Micromax was unable to compete with these brands.
| Rahul Sharma, founded Micromax on 29 March 2000. Initially the Micromax was as an IT company, Micromax decided to enter the Mobile market in 2008, on seeing the tremendous growth for mobile phone market in INDIA. |