Failure of Apple iPhone in India due to Marketing Myopia

India is the world’s 2nd largest and fastest growing telecom and handsets market. Approximately 120 million handsets are sold in India every year, out of which, around 4% to 5% are smartphones.
Clearly, India is a huge market and opportunity for Apple to establish itself in India. It could even given a tough fight to Nokia India’s monopoly. Nokia dominants the market having around 60-70% share in India.
To capture the market share, Apple brought its iPhone somewhere in September 2008, along with the service provider Bharti Airtel Ltd and Vodafone Essar Ltd.
Inspite of having such huge brand name, Apple's iPhone hasn't even made a dent. Why? This is because Apple had imported around 50,000 phones at the time of the launch in September 2008, but had only managed to sell around 11,000 units. Shocking, isn’t it?
The figure says it all. iPhone’s launch in India has been considered the biggest failure of a top-notch brand in recent times .
But what went wrong?
After referring many articles on different website, it is seen that Apple got everything wrong, starting with pricing, marketing communication to the sales & distribution model. But a careful study of all the articles, comments and reviews of launch iPhone, one realizes it is the classic case Marketing Myopia. There was a very weak link as far as consumer confidence was concerned. The company failed to strike a connect with Indian consumers.
The failure of iPhone in India, clearly indicates that Apple didn’t not do its homework before entering the Indian market. It did not bother to know the Indian consumer needs ,wants and behaviour due to which they were belted severely, which is shown by the poor sales.
Let’s analyse where Apple went wrong.
The first problem was the pricing. Apple CEO Steve Jobs had made a public announcement that iPhone would be priced at $199 globally (about Rs9, 490). But iPhone was launched in India at Rs.31, 000 for 8GB. That came as a shock to all Indian consumers, who are price sensitive. Indian consumers do not have that high buying power. Wasn’t it like black marketing? one thing that is being sold under $200 in International markets is being sold at 4 times in India .Moreover, iPhone is not a luxurious item. It is just another phone with camera, Internet, and music player. Customers thought they would get the cheaper price and were disappointed that it didn't apply to them.

The second problem was in Apple’s distribution and sales strategy. Unlike in the US, where a month-long marketing and advertising blitz preceded the debut of the iPhone, Apple didn’t run any of its own campaigns in India. All the marketing communication was left to the two licence holders, Bharti Airtel Ltd and Vodafone Essar Ltd , who didn’t have any experience in the retail selling of handsets. While Airtel ran commercials outsourced from Apple for few weeks on a few TV, Vodafone used the envelopes of the mobile phone bills sent to customers to tell them about iPhone’s entry into India. Airtel spent only around Rs3-4 crore on iPhone’s advertising. On average, they spend around Rs14-15 crore on their new launches.Distribution in India is a convoluted process involving several different retailers that employ multiple strategies to reach the many different types of customers that are found in India-article in livemmint.com. Apple and its carrier partners (Bharti Airtel and Vodafone) didn't promote the iPhone as aggressively as was done in other countries. Indian customers have to be forced to buy their products. Even if you’re selling a niche product, the communication needs to be there on what’s on offer and to get (make) people curious. Otherwise Indian buyers won’t be excited very easily.
MNP (mobile number portability) which will be introduced soon in India will allow users to change service providers without changing the number. But service provider sold with lock in clause. This meant iPhone buyers cannot retain their handset should they wish to switch operators despite having paid the cost of the handset upfront. Unlike US which predominantly a post-paid market where consumers buy the handsets from service providers under different deals, India is mainly a pre-paid market. Here, most consumers change their handsets, and even service providers, quite frequently in favour of cheaper options. They do not want to be married to a number and a phone. This did not go down well with consumers.
Texting or SMS is the hottest mobile thing in India – It is not so comfortable with the touchscreen keypad in the iPhones. No Video Recording – iPhone sure comes with a camera but not sophisticated enough for video recording which is so much fun for all. Mobile Web is not big in India but its growing – mobile internet usage is still small compared to PC internet usage. Which requires 3G and 3G is still not introduced in India. Why will any pay for something which cannot be used? Users don’t spend much on Value Added Services such as ringtones, songs etc – Indians spend a lot on phones for sure but mainly for calls and messages nothing more. Many features which are a given in a phone that costs you Rs4, 000 are missing in iPhone. Video recording, cut paste, sms forwarding options are lacking which are essentials for any Indian customer.
Furthermore, Apple can come into cellphone business in India until it manages to infiltrate the school and college campuses. Here is where Apple made mistake not targeting the right segment.

Conclusion:
Apple felt it had the right product for the Indian market and it was blinded by the success in other countries .Due to which it failed to spend more time in understanding the Indian consumers. It couldn’t connect the needs and wants of the Indian consumers due to its narrow understanding of Indian telecom market hence it failed to make a mark in India with its iPhone. The solution for this situation will be if Apple takes initiative to consider Indian market as important as US market. It has to provide customer creating value satisfaction, not just give the task to some inexperience service providers. Most important, it has to understand that Indian customers is different from US customers ,hence has to adapt to the requirements of the Indian market.

Cheers RJFS

References:
· Levitt, T. (1960). "Marketing Myopia". Harvard Business Review.
· myopia/11446-why-apple-iphone-failure-india.html
· livemint.com
· cnet news.com
· cellbharat.com

The Asian Link , causing the Recession

I came across a site The Indian Blogger:Life & Times of India.... The author has written a awesome article about reason for Last year recession. I have taken this article from his site . An excellent read...
Now we all the story...In US, a boom in the housing sector was driving the economy to a new level. A combination of low interest rates and large inflows of foreign funds helped to create easy credit conditions where it became quite easy for people to take home loans. As more and more people took home loans, the demands for property increased and fuelled the home prices further. As there was enough money to lend to potential borrowers, the loan agencies started to widen their loan disbursement reach and relaxed the loan conditions. The greed factor came in .the loan was then given to customer without checking their repaying capacity...But this had to come to end someday. About that i shall write later...
What was intersting about the this article is that he says how US got such a large inflows of foreign funds?
For this we have to go back to 1997-98s. At this time, the tiger economies of Asia (a term used to refer the countries of South East Asia like Thailand, Malaysia, Indonesia etc...) suffered a major economic crisis. Several countries of South East Asia had developed worrying financial weaknesses which were the results of heavy investment in highly speculative real estate ventures, financed by borrowing either from poorly informed foreign sources or by credit from under regulated domestic financial institutions.
The crisis began with wrong banking practices. In those countries crony capitalism (where borrower had the connections with government) became too dominant. The minister’s nephew or the president’s son could open a bank and raise money both from the domestic populace and from foreign lenders, with everyone believing that their money was safe because official connections stood behind the institution. Government guarantees on bank deposits are standard practice throughout the world, but normally these guarantees come with strings attached. The owners of banks have to meet capital requirements (that is, put a lot of their own money at risk), restrict themselves to prudent investments, and so on. In Asian countries, however, too many people were granted privilege without responsibility, allowing them to play a game of “heads I win, tails somebody else loses.” And the loans financed highly speculative real estate ventures and wildly overambitious corporate expansions.
This bubble was inflated still further by credulous foreign investors, who were all too eager to put money into faraway countries about which they knew nothing (except that they were thriving). It was also, for a while, self-sustaining: All those irresponsible loans created a boom in real estate and stock markets, which made the balance sheets of banks and their clients look much healthier than they were.
However, this bubble had to burst sooner or later. At some point it was going to become clear that the high values Asian markets had placed on their assets weren’t realistic. Speculative bubbles are vulnerable to self-fulfilling pessimism: As soon as a significant number of investors begin to wonder whether the bubble would burst, it did.
So Asia went into a downward spiral. As nervous investors began to pull their money out of banks, asset prices plunged. As asset prices fell, it became increasingly doubtful whether governments would really stand behind the deposits and loans that remained, and investors fled all the faster. Foreign investors stampeded for the exits, forcing currency devaluations, which worsened the crisis still more as banks and companies found themselves with assets in devalued baht or rupiah, but with liabilities in lamentably solid dollars.
In 1996 capital was flowing into emerging Asia at the rate of about $100 billion a year; by the second half of 1997 it was flowing out at about the same rate. Inevitably, with that kind of reversal, Asia’s asset markets plunged, its economies went into recession, and it only got worse from there.
Eventually International Monetary Fund (IMF) had to step in to save these economies. How these economies later recovered and at what cost is a different story. However, this crisis brought with it some major lessons for the Asian economies. One of the most important lessons for them was to create a solid Foreign Exchange Reserve so as to withstand the most volatile exit of the money from their markets. High reserves promise safety in a storm. Therefore, most major economies of Asia (including the big China and India) adopted a strategy of maintaining high forex reserve so as to ensure safety from any such crisis in future. This shift in priorities created a very interesting situation.
In the mid-1990s, the emerging economies of Asia had been major importers of capital, borrowing abroad to finance their development. But after the Asian financial crisis of 1997-98 these countries began protecting themselves by amassing huge war chests of foreign assets, in effect exporting capital to the rest of the world.
To say in other words, the Asian economy came in to a Saving mode. In order to maintain huge foreign reserve, they also started buying US securities. This resulted in a huge inflow of dollars into the US economy. As more and more dollars kept coming into the US economy from world over, the American investors started devising very sophisticated and innovative methods to convert the flood of money from Asia into a borrowing and spending spree for American consumers.
This Money was helped people to take more and more home loans ..which boomed the housing sector in US...
Thus it gives a brief overview of the crisis that helps us to understand the current mess in world as it is all linked.
cheers...
RJFS

GLobalization is here to stay...

I was hearing a lecture by a guest lecturer Dr. Van R Wood from Virginia CommmonWealth University.The topic was on globalization . He gave some mindboggling Facts in the introduction. Some of the interesting facts which i could recollect were :

1. In the Population of 1.3 billion in China , there are 1300 people like you!!! In India with population of 1 billion there will 1100 people like you!!!
2. China will soon be No.1 English speaking country in the world.
3. In next 8 minutes....60 babies will be born in US, 244 babies in China,351 babies in India.
4. According to Department of Labor US, a person with average age 38 will have shifted about 10 - 14 jobs.
5. The top 10 in demand jobs in 2010 didnt existed in 2004.
6. The amount of new technical information doubles every 2 years.
7. The shelf life of education is becoming shorter.
8. In 2006, engineers produced by China- 6,00,000 , India- 350,000, US- 70,000.
9. 30000 new books are published daily.
10. 540000 words are added in English since Shakespear.
11. 2.7 billion searches are performed on google each month.
12. Perdication are that by 2013 a supercomputer will be built that exceeds the computering capabilities of the Human brain.
13. In short...what we are witnessing is CHANGE .... A shift is bound to happen....

He goes into the history talking about 3 great movement of capital in the world. the first shift was in 19th - 20th century where money from Europe poureed into the New world. the Second shift was in 1950- 1960s were money poured from US into Europe and East Asia. Now we are currently in the Third Shift . it is the great expansion of global economy all far the largest it seems. It is " RISE OF THE REST."

From 2006-2007 about 124 countries grew at 4 % or more out of which 30 countries are from Africa. Income per person is on rise. the standard of living has been rising. Poverty is slowly reducing. China has lifted 400 millions out of poverty. The economies have opened up to the world outside. the global trade has increasedhas increased by 133%. Goldman Sachs predicts that by 2040 Brazil , Russia, China, India, Mexico will have largest and dominating economies in the world. gone are the days when economies were differentiated as capital or labor. What distinguish economies today are "ideas".

Dr. VAN concludes that Why globalization will stay. Majority of market soruces of goods and services lie outside of one's country and your are forced to get them if you want to prosper. Competition is fiercely rising around the world and what can make you competent is by sharing and obtaining knowledge and resources from outside .

it was indeed an interesting presentation . Of course, some had nice power nap during the session ( our general secretary, King Khan, Gorgi... lol!!!).

But by the end of the presentation i was wondering till what extend globalization will go? will there be end to globalization? How will the world look at the end of globalization?

Are there any answers??