Aiming to provide the right value to the consumers, Lava International, the eight-and-a-half-year old handset company, claims to be the only company of Indian origin to have complete control of the entire product making and value chain, right from conceptualisation, research and design and marketing. This, according to the company head, helps the brand bring better quality for the consumers.
Xolo and Lava are two equally popular brands from Lava International riding on the same category. Xolo was launched for the online sales world while Lava is more for the traditional customer who would like to touch and feel the product before buying it.
Xolo was created for 30 per cent of the consumers who buy online. Xolo’s focus is the online savvy customers who prefer the modern ways. On the other hand, Lava serves the remaining 70 per cent who still prefer the brick and mortar system, maybe for the look and feel or instant satisfaction. This clear distinction between the two brands helps the company as it is practically difficult to be present in both the channels at the same time with a singular price rate.
Speaking about the profitability associated with keeping the pricing low, Sunil Raina, CMO of Lava International, said, “We don’t really keep the pricing low. We just charge according to the value provided to the consumer. When we give high value, we do charge a higher amount. Moreover, Xolo has never been a low-price product but Lava is. However, with respect to competition, Lava too has been charging a premium over the competitors.”
Asked if Xolo is targeting the affluent class, Raina said, “I don’t really differentiate customers like that, we target them on the psychographic level. This means that somebody who is tech savvy and looks for newer things. A non-tech guy will be looking for specific features in a phone. For Xolo, the youth is a very important target. India is a young country, but you have to be specific about which particular segment you want to target among the youth.”
Cricket is for masses, football has a distinct appeal
Xolo had tied up with Liverpool Football Cup for three years as its regional marketing partners across India, Sri Lanka, Nepal and Bangladesh. In India with cricket leading the flock of favourite games where cricket is like a religion, how good is the Liverpool association going? Who was the brand targeting?
Raina thinks that cricket works on a completely different parameter when compared to football and that there is no direct comparison between the two. He said, “The brand was fairly targeted at young urban customers from SEC A, A1 and A2. About 50 per cent of our customers are from the top five metros and that’s where the popularity of football lies. This sport has a lot of affinity in that particular segment. When we mapped our target audience, we realised that cricket is more for masses and does not have a distinct appeal, hence, football.”
About the expenses involved, he explained that cricket would have been a lot of wastage for them. “As a lot of population (who follow cricket) was outside our TG, football was more efficient for us.”
More opportunities in software
Talking about destructive technologies and hardware innovations, Raina said, “In terms of innovation in this category, whether you do it today or a few weeks later, someone is going to follow that and technology is as democratic as it can get.”
Raina pointed out that while software is still craving for innovations, the hardware area has almost reached a stage of saturation. Battery is the only issue waiting to be resolved in the hardware zone. “I think more opportunities are going to arise from the software and not so much from the hardware. The plus point is that software research isn’t much expensive.”
Can low-pricing be a USP?
The scope of Indians in buying mobile phones is increasing and so is the reach of mobile penetration. The first-time mobile buyers are always looking for more cost-effective options than fancy ones. With Lava and Xolo both selling the ‘affordable’ clause, can low-pricing be a USP?
According to Raina, the company aims at giving the right value to the consumers. Raina said, “Price is a balancer of value as long as you are able to create a certain value for the consumer. We don’t keep price in mind when we make products, we actually keep consumers in mind. That’s more important to us.”
“In some cases, people finish their toothpaste later and buy a phone before, it is as fast as that,” he said. The penetration of mobile has been faster than any other technology acceptance in the country.
What are the changes in the landscape and the turning point for the country in the mobile industry?
A big role was played by the operators and that’s when they started penetrating through the rural areas. Raina added, “Basically, two things were happening. Initially, they were restricting themselves to high-value markets, but when they started penetrating down, they had to reduce pricing, removing one of the big barriers for sale of mobile phones. People were not able to afford the call charges at that point of time but when the mass-ification happened, prices, call/SMS charges started coming down and because of that the handsets started coming in. Otherwise, there was hardly any market for people who could not spend say Rs 5 or Rs 32 on a call. The moment it got secularised, the handset industry bloomed.”
Value chain and partnership
Lava claims to be among the first ones to directly deal with distributors and bypass two extra layers, taking up the entire control of the value chain.
“‘A partnership is essential for better innovation’ and Xolo is the first Intel-powered smartphone in India under the brand, which has witnessed great success. The brands have also partnered with Windows in the past,” said Raina.
Lava’s brand awareness is high
Competitors like Vivo, Gionee and others are aggressive on the advertising front but Lava is not. Why?
“These brands are launching in India and have to spend to be visible. Lava, however, has been there for nearly eight years and the brand awareness is high, which means we need not make that effort. They have money and they are spending, but excess of money is bad too. Even innovation happens when resources are limited. And from my personal experience, with abundance of resources, the creativity takes a hit,” he added.
Asked about the challenges and opportunity in this age of e-commerce and people changing their phones in less than a year, Raina said, “If there is a certain consumer behaviour, then you can find a way to take care of it, give value to the consumers within that behaviour and of course there is an opportunity. I don’t see anything challenging in it.”