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Mobile Market

Mobile Market. An analysis of mobile phone market in India. Vaibhav Gupta, Varun Kaw, Vikram Singh, Rahul Shah, Tapas Tiwari, Tsetan Angmo Managerial Economics. 2 nd September 2011. Growth and Diffusion of Mobile Phones in India.

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Mobile Market

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  1. Mobile Market An analysis of mobile phone market in India Vaibhav Gupta, Varun Kaw, Vikram Singh, Rahul Shah, Tapas Tiwari, Tsetan Angmo Managerial Economics 2nd September 2011

  2. Growth and Diffusion of Mobile Phones in India

  3. “A lot of people think that the new economy is all about the internet. I think that it's being fuelled by the internet - as well as by cell phones, digital assistants, and the like - but that it's really about customers. ” – Patricia Seybold • “Quote” (optional) – Quote source

  4. India: Ideal destination for Investments • World’s second largest telecom market in the world. • 15 million new users added per month. • Urban Teledensity = 70% Rural = 30% • Liberal Foreign Investment Regime – 74% FDI allowed. • Government- provides tax sops and telecom specific SEZ • Government’s Revenue ( regulatory charges + taxes) increase as operators’ revenue increase. Low Teledensity= Higher Opportunity

  5. Mobile Handset v/s FDI

  6. Mobile Tele- Density • 10 fold increase in teledensity from 2003-04 to 2010-11

  7. Production and Export (millions)

  8. How it helps the economy – micro view • Some things which we might not have thought as a benefit • Example of reach of FM Radio • Example of m-commerce • Increased productivity by smart phones

  9. Market Target and Segmentation- Economic View

  10. Segmentation Strategy Potential Market Top Income Group Lower income group Middle Income Group Features Base Features Base Features Base

  11. Our Survey We surveyed about people choice and preferences for a mobile • 143 overall responses, 70 manual • Population contains people from all age and income groups • Sample is a bit skewed towards people of age-group 25, 60% of population from this group. Considering the average population to be mostly in this group.

  12. Survey Tells us • Around 70% of the people surveyed believed NOKIA is the most durable phone. • However more than 50% of the people in the income range >20k/month preferred BB or APPLE . • In the income bracket <10k brands didn’t matter features did. • Battery was essential in every segment.

  13. Income for Nokia Users • 46 users responded Nokia • Likely to be a normal distribution (>30) • Average salary = 26.67 • S.D. = 7.633 • 90% confidence interval • Income group of Nokia users 20k-31k

  14. Success Story 1- Kerala Fisherman • Gets a good catch of sardines . • So do the rest of the fishermen • Increased supply makes the prices fall. • The fishermen has to throw back into the ocean the unsold fishes • In the nearby village the supply was short • In came the mobile phones in 1997 • After that the consumer prices fell sardines fell 4% and the fishermen’s profits rose by 8%

  15. Success Story 2- VAS • Revenue generation by VAS. • ABCD of VALUE ADDED SERVICES. • Communication with god has changed over the years • Rather than waking up in the morning to a jarring alarm wake up with a prayer @30rs/month • Other devotional services provide the auspicious and the inauspicious dates of the calendar year • Free quotes from your god @28/month or 7/week with a free screen saver too.

  16. Mobile Banking for Villagers • Scarcity of banking system in villages can be covered up by mobile banking • March 2012- around 73k villages with 2k population each identified for mobile linked basic bank. • UID to be linked with the Banking Correspondent to make the transfer foolproof. • Not glitch free can have some power and connectivity issues.

  17. Drivers and trends

  18. Drivers • Government Policy • Market Players • Income Level • Telecom policy • Industry specific foreign policy • NOKIA started up in India in1995 • 93 handset companies at present • Per capita income • Massive middle class

  19. Drivers -2 Price • Customization • Handsets ranges from 1k – 50k • Very low usage tariffs • User-friendliness • Responding to the consumer behavior

  20. Calling Rates also drives market

  21. Challenges • Low level of penetration in semi-rural and rural areas with skewed teledensity of 64.74% • Lack of Infrastructure • Saturation at urban level • Mobile internet users

  22. Trends • Replacement Sales • Payments and Banking go online • Hardware to Software transition- applications and utilities. • Smart phones and tablet convergence • Rise of Indian companies

  23. Latest innovations

  24. Players , Competition and Factors of Demand

  25. Major Players in India

  26. FYIs • Finnish handset maker Nokia is losing its market share in India • Nokia currently has a market share of 36.3% at the end of June 2010 from 54% at the end of June 2009. • Second biggest player happens to be Samsung . • And MicroMax has surprisingly become the 3rd largest player recently according to market share.

  27. Different Tier of Mobile Phone • LOWER TIER(Rs1500 to Rs10000) 70% of revenue generate from this market segment. • MID TIER (Rs10000 – Rs25000) 20% of revenue generate from this segment. • TOP TIER (Rs25000 to Rs100000) 10% of revenue generate from this segment.

  28. Tier and Buying Pattern Features Price BUY Basic Users Lower and Top Tier Groups Middle Income

  29. Our Survey • For the basic users durability, battery life, warranty and user friendliness sound quality was very important and other high end technologies didn’t mattered. • Most of these persons were either daily wage earners or the people above 60. An interesting thing to note was that 3 out of 6 persons gave importance to camera as well. • Mobile with a camera is on the way to become a basic feature.

  30. Till the age of 40 we discard phones just within 1-2 years

  31. SWITCHING 1.Income level Increase 2. Technology development Lower Tier Mid Tier Switching propensity from lower level segment to the mid tier segment is expected to increase with the increase of income level and technology development

  32. Women and Mobile • Global opportunity as well as social welfare • 300 Million Fewer Female than Male Subscribers: A US$13 Billion Opportunity • Mobile Phones Unlock Economic Opportunities, help to save time and money, improve productivity, increase return on investment and maximize household resources.

  33. MERA MOBILE MERA SAATHI • Mobile penetration among women in many developing markets is consistently low. • In an effort to bridge the mobile gender gap in India , Uninor joined forces with the GSM Association Women advocacy campaign. • It was officially launched in January 2011, in the states of Uttar Pradesh and Bihar.

  34. Key Developments, Customer expectations and Behaviour

  35. Key Developments • India has become the largest market now in terms of sales and growth rate. • Apple is ahead of Nokia and RIM Blackberry in Smart Phones Market globally. • G-Five, Micromax , Lemon, Fly have become increasingly popular. Thus increasing the competition . • The number of handset makers in India has grown from 5 to 28 in the last year alone. • Impact: Market is tending towards Perfect Competition unlike earlier times when it was tending towards Oligopoly.

  36. Success of Indian Companies • Target Segment: Rural Market & Low Wage Earners. • Strategic Pricing: Cheaper models with loaded features. • Connect with Customers on the basis of their region & language. • Freedom Of Shifting to a better platform, better brand or newer technology later. • M-Commerce in Rural India. • Applications like Weather forecasts, crop prices, fertilizer prices etc. on VAS Services.

  37. Customer Buying Pattern

  38. Market Share(Survey Results)

  39. Our Survey Suggests that MALE FEMALE • Nokia sells for its durability, applications and user-friendliness. • Among working males, Blackberry is highly popular because of its email and calendar sync features • Among elders and senior level professionals, Apple is the preferred choice because of its exclusivity and appeal • Sony Ericsson and Samsung are popular because of their styling, music and camera features. • Among working females, Nokia is a popular option because of its feature packed phones in the segment, and ease of use. • Among Elderly females, nokia is preferred option due it its simplicity of operation

  40. Expectations • 62% of Male and 66% of Females want to locate restaurants and shops in a particular radius. ( most wanted feature). • 50% Of female respondents want to locate and track their friends using the mobile , while only 30% males want that. • 10 out of 63 female want to use barcode to find product info while 57 out of 109 males would love to use it.

  41. Revolutionary Phone Deal ? We surveyed that how much they can shell out for the world’s best phone made ever having these features • Face Recognition • Voice Assisted GPS with advanced navigation using MQRS technology. • 3D Video Recording, 3D video playback and gaming without glasses. • Universal In- built remote to handle all devices in your home. • Lots of Hitech features like WiDi over Wi-Fi.

  42. There was no Deal- it does not exist • Average money that people having the last two digits we asked for between the range of 0-50 was 16.5 k • While the average for the other half, (50-100) was 23.5k • Behavioral economics can explain this. • Known as Anchoring effect

  43. The Iphone Using Behavioral economics to determine the consumer base of Iphone. The exclusivity and Constructed Preferences theory. Too much choice issue with other phones. Sheena S. Iyengar and Mark R. Lepper, “ When Choice is demotimavating : can one desire too much of a good thing”

  44. Work In Progress 1. Correlation between the no. of phones owned and the demographic classification – Coefficient of determination. 2.Factor analysis-- correlation between ranking of different features, and then arranging into clusters, the features which show highly correlated ranks 3.Porter Five Forces Analysis 4. Analysis using Game theory to determine how are certain models priced and targeted

  45. Thanks for Listening Questions and Comments? You can also mail your comments and suggestions to vaibhav.g13@mibdu.org, or shoot us on Facebook group.

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