Firstly, I would like to thank my subscribers/followers for actively participating in my survey. The COVID-19 issue followed by the events at the border are bringing about a change in the consumer behaviour, and I thought it would be important to capture the swing in the brand preferences with respect to who all will be the gainers and losers. These should be taken as short-term changes that will get compounded by the entry of #RelianceJio which could increase the share of Indian brands substantially.
The results are interesting, let’s resume.
1. Most research agencies, partners/people from the industry have been talking about a shift in market shares. And, the survey seconds that.
2. A third of the respondents feel that the shift away from Chinese brands could be higher than 15% with another 28% putting it at between 10% - 15%. Only almost 14% of respondents feel that there will be no change. A drop in share of Chinese brands will happen is what we can expect based on the above. Based on the data this could be approx. 15%.
3. The Chinese brand that is expected to lose the maximum is #Xiaomi with close to 50% of the respondents saying so. #Oppo is the second brand to lose.
Some of the reasons why the survey participants feel so, are as under:
a. When there is a drop, the largest brand tends to lose maximum.
b. Quality issues.
c. Retail brand loyalty is weak.
Xiaomi needs to fence itself on these 3 points.
4. Samsung seems to be gaining the most. Contrary to what people/articles are saying in terms of a major shift towards Indian brands, they stand at No. 3 position. Global brands like #Nokia and #LG also seem to be gaining at the expense of the Chinese brands.
5. Seems the losses in market shares of Chinese brands will be more in the offline channel than the online channel.
The reasons given are as follows:
a. Offline will tend to support Indian brands due to low margins on Chinese brands.
b. The capability of offline to shift customers to Indian brands on a one-to-one interaction with the customers either directly or through ISDs.
c. With an expected increase in the share of the online business, Chinese brands diverting more stocks online rather than offline.
d. The feeling of guilt while buying a Chinese brand across the counter in offline. Online does not have this issue.
e. Online buyers focussing more on price/spec ratio rather than on emotions.
f. Online having a higher contribution than offline in H2.
Time for Chinese brands to put more focus on offline which seems to be more prone to decline to reduce the hit?
6. While the general feeling is that Indian brands stand to gain substantially, the survey findings show different results. A majority of the respondents feel that the market shares of the Indian brands may not grow beyond 5%.
While the % may seem small, we must keep in mind that in volumes this would translate to 1.5 million nos. in 2019 to approximately 6.8 million nos. in 2020 despite the overall market shrinking from 150 million to 135 million approx.
This translates to a volume of 5.6 lac smartphones a month.
Assuming #Lava and #Micromax to take at least 80% of the 6.8 million volume expected for Indian brands in 2020, we are looking at approx. 4.5 lacs phones a month for the two brands. This is not a bad number considering where they stand today.
7. From our earlier analysis, it is evident that the loss of the Chinese brands is primarily the gain of #Samsung and the other Global Brands - Nokia/LG.
8. People would have expected Micromax to be the maximum gainer. Possibly the channel sentiments favour Lava more than Micromax presently and Micromax needs to work towards their shortcomings to beat Lava. #Karbonn and #Intex may not gain much.
9. I had listed down 9 parameters for respondents to rank from a customer perspective for the rise of Indian brands. Some of these were pain-points for them earlier. The results are as under:
10. The sweet spot for the Indian brands is the price segment between Rs.5k - Rs.10k. At best it could be stretched to Rs. 12.5k with another 12% saying so. Seems anything below Rs 5k and anything above Rs.12.5k may not be the best segment for them.
In Summary, the survey findings point towards a combined market share of approximately 55% for the Chinese brands, 24% for Samsung, and 5% for the Indian Brands. A gain for Nokia and LG. How it translates in the end is for all to see!