Saturday, October 12, 2013

Micromax, the true Indian branding success


I usually don’t read Annual Reports that are mailed systematically by the Company Secretaries of the organizations whose shares I have bought. More so if it is AGM address.

But for a change when the AGM address of ITC Chairman YC Deveshwar landed into my inbox recently, I felt like reading it. Maybe because the ITC shares have given me good returns and also the fact that ITC is a great case study of how the group has reinvented itself from being a predominantly Tobacco major into a well-diversified conglomerate. It is also probably the best example for a professionally managed business amidst the predominantly family owned businesses in India.

Mr. Deveshwar's address is very interesting and informative. I specifically like the part on THE INDIAN GLOBAL MARKET: DOMINANCE OF FOREIGN BRANDS. He quotes The ET Intelligence Group report - "...royalty payments by Indian arms of top MNCs have trebled over the past 5 years. The report points out that in FY12, 306 listed companies paid royalty and technical fees aggregating almost Rs 35,000 crores.” Further, a similar analysis by Business Standard of 75 BSE500 companies reveals that these firms paid out royalty equivalent to 32% of their net profits in FY12. This sudden surge he notes is after the removal of ceiling on royalty payments in 2009.

He also quotes media reports that this spurt in payments did not reflect any noteworthy value-addition from technology transfer by the foreign entities. These media articles also expressed concern at the adverse impact of this huge outflow on minority shareholders and on the exchequer.

Look around, one can easily find this dominance in our lives. Almost all the products that Indians consume are foreign brands. But then as Mr. Deveshwar says there are not many Indian success stories. He has listed few in that address. 

What probably he missed is Micromax! The great Indian mobile brand. A brand that has managed to make a mark for itself in a space that is dominated by the Korean Chaebol. 

And I must say in its fight Micromax had to face not only the competition but also the Indian mindset! 

Indian mindset: I am not sure what it is because of but Indians probably don't trust Indian brands. Maybe Indian brands actually do not deliver or as it is said we have a colonial mindset. For us, anything foreign is superior. Couple of years back when Apple was yet to revolutionize the smartphone market, it was the world of feature phones. When I bought one of those feature phones, a colleague exclaimed - Micromax! Yes, it was that degrading tone. Things have changed since then and Micromax seems to be fast catching up with Samsung. But has our mindset changed, I can’t be too sure.

Yes, it's a Me Too: Yes, but in many ways Samsung, LG or any brand is also a Me Too. The advantage of Android ecosystem is so, it provides opportunities for many. Everyone assembles!  

Branding, the game changer: In addition to lacking the drive to innovate, the Indian brands are also not very successful in branding. Thankfully, Micromax has been very savvy. In addition, Micromax products are attractively priced. 

Just like Galaxy, Optimus and Lumia, Micromax has managed to draw its own Canvas. 

The good news is that Micromax is not alone. Recently when I was planning to buy a phone and sought advice from some of my friends. They not only suggested Micromax but also spoke very highly of Karbonn and Xolo. Heartening! Couple years back, many Indians would not have considered them a great choice. 

As a person who has used Micromax product, I urge my fellow brethren to take pride in our local Indian brand. Not just because they are Indian but because these products 

  1. Look as great as any other
  2. Perform as great if not greater than others 
  3. Come at price points which are very attractive 
Unless you want to sponsor the royalty payments that Mr. Deveshwar's address talks about. 

But why only mobile phones, I think there are great Indian brands in almost all the categories. Take Dabur Red for example. Why not Bovonto or Kalimark! And why not Poomer

Go Indian! 
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