By Alisha Singhal
Apple has found solace in the ever growing smartphone market of India, especially after their growth story in China has stagnated. Apple has started a partnership with Shiv Nadar’s HCL Infosystems for the distribution of its products through brick and mortar stores in smaller towns. With 13,000 retail outlets and brands like Motorola, Lenovo, Braun and Panasonic among others already in its portfolio of distribution, HCL Infosystems is the way to go to boost Apple’s expansion. Despite 55% of iPhone sales coming from online sources, Apple wishes to have a stronger footprint offline, which is where HCL comes in.
Making India Apple-friendly and vice-versa
The decision is a follow up of the announcement made by Apple’s CEO, Tim Cook, last year to start manufacturing iPhones in India, as a way to contribute to the ‘Make in India’ initiative. Apple has already started its first manufacturing facility in Bangalore to produce the iPhone SE, which will be sold at a marginally lower price to attract the mid segment of smartphone buyers. However, Apple still cannot open its own retail stores because of its inability to meet the strict Indian FDI rules. It resorts to selling through franchisee-run exclusive brand stores, multi-branded and neighbourhood stores, and e-commerce websites. However, in the event of getting approval, Apple plans to open state of the art stores at prime locations in metropolitan cities like Delhi and Bombay.
Although it is a premium segment player, Apple sees an opportunity in the Indian smartphone market. The number of smartphone users is expected to reach 340 million by the end of the year. To grow its existing 3% market share in the country, Apple has to boost its distribution among existing users. However, its plea to sell refurbished phones in the country was rejected as it held the risk of cheap mobile phones entering the country. Indian consumers prefer to buy the older versions of Apple devices since their prices drop significantly after the release of a newer model, which is how the company attracts the price sensitive market. The move is also a way to compensate for the deaccelerated growth in China, which had been wrongly predicted by Tim Cook to become Apple’s biggest market.
Competing with long-standing Chinese brands
In India too, Apple has to tackle with the mass marketed Chinese smartphone brands like Xiaomi, Oppo and Vivo, along with its long-time rival, Samsung. In fact, its Indian manufactured iPhone SE will be specifically marketed to smaller cities to deal with these rival brands. The data curated by the International Data Corporation (IDC) shows that the Indian smartphone market is 51% Chinese: Lenovo (9.5%), Vivo (10.5%), Oppo (9.3%), and Xiaomi (14.2%). This is the result of comprehensive marketing. This entails occupying even the smallest mobile shops in the country, a massive and accessible online distribution system, and advertising through countless display hoardings and sponsoring sports events. For example, Vivo sponsored the Indian Premier League while Oppo is the official sponsor of the Indian Cricket team for the coming five years. Even Samsung with its massive 28.1% share in the Indian smartphone market readily caters to the needs of the lower as well as the higher income groups through its huge and varied portfolio.
Pleasing the younger market
Apple needs to shift focus to the younger population of the country, which consumes massive amounts of data: from social media to entertainment. There is still a portion of the Indian population which considers Chinese brands to be inferior and Apple becomes an ideal product for them. However, it will be interesting to see how Apple maintains its charm and quality by becoming more omnipresent through its future expansion among retail outlets.
Featured Image Source: Pixabay
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