Comprehensive Marketing - Business Plan Example

Comprehensive Marketing Plan Executive Summary The Smartphone market in India is growing at a rapid pace. The Indian consumers have a plethora of options to choose from as many indigenous and international smartphone manufacturers vie with each to grab a larger share of market share of this lucrative market. The present paper examines the smartphone industry in India. It chalks out a comprehensive marketing plan for a company that intends to introduce its new brand of smartphone named Yoxnea (fictitious name) in the country. Yoxnea intends to target consumers residing in rural India. The paper enumerates the objectives and goals determined for the brand for its Indian operations. A detailed discussion on the target market as well as marketing mix has been carried out in the paper. A modest attempt has been made to estimate the budget requirements. Finally the paper details an action plan which must be adhered to if Yoxnea is to succeed in India. Introduction: Situation and Analysis The smartphone market in India has grown at astounding rates in recent years. The Indian smart phone industry registered a growth rate of 89 percent in 2013. 44 million smartphone units were sold during the year (Srivastava, 2014).    India is one of the fastest growing smartphone markets in the world. The country has attained the status of the third largest smartphone market in the world, next only to China and United States. According to research firm International Data Corporation (IDC), the Indian smartphone market will continue its growth spree at an estimated 40 percent during the next five years (Srivastava, 2014). The growing trend of using the Internet on hand-held devices coupled with falling handset prices has provided the impetus for growth to the smartphone industry. The Indian consumers are price conscious and thus majority of the smartphone sales in the country are in the sub $200 category. The opportunity for Smartphone marketers is mouth watering. Many domestic and international companies have jumped into the fray to cash in on the lucrative market. As a result, the smartphone market in the country has become highly competitive. Market Share Samsung has maintained leadership position in India by capturing 29 percent market share of the smartphone market. Home-grown company Micromax is a distant second with 18 percent market share. However the rate at which Micromax is growing, it is expected that the indigenous company will topple Samsung from its numero uno position in the near future. Karbonn (8%), Lava (6%) and Motorola (5%) occupy the third, fourth and fifth slot respectively in the list of top smartphone manufacturers in India. All other companies including Apple, HTC, Blackberry and a host of Indian and Chinese brands account for the remaining 34 percent market share (Gaurav, 2014). Objectives and Goals India is the second most populous country of the world with a population of 1.2 billion people. More than 70 percent of the Indian population lives in rural areas (IBEF, 2014). The Indian rural market has surfaced as a significant growth engine and has attracted numerous international players. It is estimated that many of the biggest companies operating in Indian generate one-third of their revenue from the rural markets. Fast moving consumer goods giant Unilever reportedly earns more than half of its revenue from the Indian rural market. Unilever has done extremely well by adopting its product portfolio as per the needs of rural customers, customizing its promotional campaigns and penetrating deep into rural markets through innovative distribution strategies (Datta, 2013). The long-term objective of Yoxnea is to become a house hold name in rural India. The country has close to 650,000 villages which are home to 850 million consumers. Consumption patterns in these parts of the country are mirroring the consumer behavior exhibited by urban consumers. The rate of growth of smartphones in rural India is double than the growth in urban India (IBEF, 2014). Yoxnea intends to target the middle-income and lower-income section of the Indian rural society. This segment owns a feature phone and intends to upgrade to a smartphone. Yoxnea aims to capture 5 percent market share of the smartphone market in rural India. During the medium run, the brand intends to increase its market share to 15 percent in the said market. As stated earlier, the long-term objective is to attain leadership position in the rural belt of India. The Target Market Yoxnea smartphones boast of numerous features that will add value to the consumers. It is expected that consumers living in the media dark regions of the country will embrace these phones with open arms. Yoxnea will target the farmers who toil hard in the fields. These people are aged between 35 and 65 years of age. In fact, many of them continue to do work for as long as health permits. The literacy level of these people is low. This target market does not need a flashy smartphone. Their real need is a sturdy, reliable smartphone that they can use during the course of their daily work. Strategy and Tactics Yoxnea will adopt its marketing mix and devise appropriate tactics to strike the right chord with its target market. Marketing Mix The ensuing discussion is on the marketing mix, or 4Ps of marketing. Product: The basic need served by the Yoxnea smartphones is that of ‘communication’. The target market will be able to remain in touch with business partners, family and friends when they use the gadget. Additionally, the smartphone is equipped with numerous features that will benefit the famers to a great extent. The Yoxnea smartphones boast of a flashlight and access to FM radio. Both these features add significant value to the rural Indian consumers who often spend long hours working in the fields. While FM radio will be a source of entertainment to them, the torch will provide light when these people walk their way back home in pitch dark conditions. The waterproof Yoxnea smartphones will be useful since farmers irrigate their fields and remain in touch with water. This feature will assume significant importance during the monsoons in India when it tends to rain a lot. Price: All variants of Yoxnea would be priced between $100 and $ 150 making it affordable for the target market. An introductory offer of $10 discount would be offered during the first fortnight after the Yoxnea smartphones are launched in rural India. A margin of 20 percent will be given to the retailers as a means of adopting the ‘push’ strategy. Since the target market is not technologically savvy, the retailer can play a vital role in influencing the final decision of the consumer. Place: A robust sales and distribution network is the key to success in rural India (Dawar, 2014). Yoxnea will appoint carrying and forwarding agents (C&F) in all major agricultural states of the country. The states of Punjab, Haryana, Madhya Pradesh, Andhra Pradesh, Rajasthan, Maharashtra, and West Bengal play a pivotal role in the agrarian development of the country. The identification and selection of C&F in these states will be a critical factor in achieving the desired penetration levels in rural India. The wholesalers will be appointed at a district level. Each of these wholesalers will service all the villages that come within a radius of 100 miles. Their task would be to replenish the stocks of all retail outlets in these villages. Promotion: Yoxena intends to enter Indian with a bang. The brand will sponsor the Kila Raipur Rural Olympics to announce its arrival. The three day Kila Raipur games are held in February every year. The rural sports festival has grown in popularity over the last six decades. It is estimated that more than 4,000 sportspersons participate in the event. The Kila Raipur Rural Olympics are viewed by around 1 million spectators (Cook, 2014). Sponsoring this event will lead to widespread awareness of the Yoxena brand in rural India. As a part of its promotion campaign, Yoxnea will roll out pre-launch posters. POP display material and standees at all mobile dealerships. Mobile vans will be used to create awareness and generate excitement about the brand. In addition to this, promotional activities will be carried out at ‘Haats’, the weekly village marketplace. ‘Brands-in-haats’ has emerged as a growing phenomenon for rural consumer activation as well as brand marketing. Haats are also a congregation point for Indian consumers and are being extensively targeted by companies like Nestle and Nokia for marketing activities (Vats, 2014). Selecting Mode of Entry There are numerous ways by which a company can enter an international market. These entry modes are exporting, franchising, entering into joint ventures and setting up wholly owned subsidiaries. Yoxnea will open sales offices and service centers in India to increase its toehold in the country. However the manufacturing will be outsourced to countries like China as a means to cut production costs. China has emerged as a major production hub and many multinationals outsource their production activities to the most populous country of the world. It is for this reason that China has earned the tag of ‘Workshop of the World’. Apple Inc., which develops the immensely popular iPhone, has also adopted the same model. Yoxnea will open four sales offices; one each in North, East, West and South. All these four offices will be owned and operated by the company. This set up will ensure that the vast geographic region of India is adequately covered. In addition to this, the head office of the company will be situated in Delhi, the capital of India. The task of the head office would be to coordinate all the sales and marketing activities of the regional sales offices. Other functional areas like human resources, finance, accounting and legal would also operate from the head office. The service centers would be outsourced to third parties. Yoxena will strive to scout for one big vendor so that a pan-India contract can be signed with that entity. This will ensure sufficient volumes for the service agency and keep it interested in Yoxena’s business. Budgets The capital investment required for setting up the head office and four regional offices is estimated to be $10 million. It is recommended that the company operates from rented offices for the first year. This will enable it gauge the pulse of the Indian market and get sufficient time to find appropriate locations for setting up its own offices. While there is no capital outlay on setting up factories and production plans as the production is to be outsourced, the cost of manufacturing has to be borne by Yoxnea. The company will procure 5, 00, 000 units of the Yoxnea smartphone in the first year. The average negotiated price per unit turns out to be $75 FOB. An estimated $15 per unit will be spent on warehousing and last mile transportation to the retailer. Thus total cost per unit turns out to be $90. An amount of $45 million ($90 unit price * 5, 00,000 no. of units) has to be set aside for the purchase of the smartphones. The administrative expenses including rent, wages of staff, electricity, stationary items, refreshment, maintenance and other miscellaneous items are likely to be $3.5 million per annum. The company will require an additional $1.5 million for sponsoring the Kila Raipur Rural Olympics and for meeting other promotional expenditure. Thus the total amount required by Yoxnea in the first year is $60 million. Of these $10 million is non-recurrent in nature. Thereafter the operating expenses, including cost of goods sold will be to the tune of $50 million every year. These expenses are likely to remain the same unless the company decides to expand its scale and scope by way of more products or wider geographic reach. Action Programs The action program for Yoxnea along with the timelines is discussed in this section. The company will have to ink pacts with Chinese companies to whom the production work has to be outsourced. One possible partner is Foxconn which works for Apple Inc. and various other electronics and consumer durable behemoths (Colt, 2014). The contact has to be negotiated and signed before the end of December, 2014. All other vendors, channel members, and business partners have to be finalized in the month of January. The first lot of 1, 00,000 units of the smartphone must reach the Yoxnea’s C&F agents by January 31, 2015. The company should have all advertising material including POP material for retailers ready by February, 2015. The sponsorship of the Kila Raipur games is also scheduled for this month. The distribution channel should be fully functional during this month so that the consumers are be able to buy the smartphones from the retailers. If all the aforesaid deadlines are met, Yoxnea’s business would be underway in rural India by February 2015. The company can construct its own offices after the teething troubles are over. Ideally, its own offices should be ready by the end of December, 2015. References Colt, S. (2014). Foxconn Is Building A Whole Factory Just To make Displays For Apple. Business Insider India. Retrieved from http://www.businessinsider.in/Foxconn-Is- Building-A-Whole-Factory-Just-To-Make-Displays-For- Apple/articleshow/45224649.cms Cook, S. (2014). 8 Quirkiest Festivals in India. About.Com. Retrieved from http://goindia.about.com/od/festivalsevents/ss/8-quirkiest-indian-festivals_2.htm Datta, A. (2013). Rural Market Key To HULs Growth, Says Unilever CEO Paul Polman. Retrieved from http://www.livemint.com/Companies/bAO2Lc9sLfG6H90U1MIehP/Rural-market-key- to-HULs-growth-says-Unilever-CEO-Paul-Pol.html Dawar, S. (2014). Marketing to rural India. Business Standard. Retrieved from http://www.business-standard.com/article/management/marketing-to-rural-india- 113070700506_1.html Gaurav, A. (2014). Best smartphones in India under Rs 15,000. India TV. Retrieved from http://www.indiatvnews.com/business/india/best-smartphones-in-india-under-rs-15000- 13565.html IBEF,. (2014). Indian Rural Market. India Brand Equity Foundation. Srivastava, P. (2014). What’s Driving Smartphone Market On High Speed. Business Insider. Retrieved from http://www.businessinsider.in/Whats-Driving-Smartphone-Market-On- High-Speed/articleshow/43156936.cms Vats, R. (2014). Haat tricks. Hindustan Times. Retrieved from http://www.hindustantimes.com/business-news/haat-tricks/article1-784078.aspx Read More