The handset segment of LG Electronics India (LGEIL) is gaining ground fast. Riding on the success of its Cookie series, the segment is set to account for 18-20% of the overall business of the group. Sudhin Mathur, business head (mobile communication) of LGEIL, discusses with FE?s Avik Das the changing dynamics of the Indian mobile market and the company?s responses to these sweeping changes. Edited excerpts:
Despite being a big brand, why hasn?t LG?s mobile business not done very well?
On the contrary, if you look at the last one year, we have secured a double-digit growth. We have taken a slew of initiatives during the period in terms of building our brand, upgrading our portfolio, strengthening our distribution network. So, as a brand, we are progressing very well and growth has been as per our expectations. The mobile phone business is likely to contribute about 18-20% to the overall business of LG against 7-8% last year. There have been some basic changes in the organizational set-up. The mobile business has now become an entirely separate vertical within the LG organisation.
How much is your market share at present?
We have grown by almost 100% year-on-year. We are present at the top 35 towns enjoying a market share of 7%.
How do you see the emergence of so many brands in the mobile phone market in India?
It?s a growing market. In 2009, the market was on a slower side because of the slowdown but in 2010, we have seen tremendous growth with the market growing around 20-22%. It?s always good to have many players in the market as it will drive the brands, including us, to go for innovations and produce better products and consumers will also benefit from it as they will have more options.
How are you gearing up for the price war?
Our portfolio is spread across the entire spectrum. We have phones starting from Rs 1,000 going up to Rs 30,000. Across the price brand segment, we are launching almost 40 models this year, including the Optimus series that comprises 10 smartphones. By next year, we expect our smartphones to be in the sub-Rs 10,000 level.
What are the major changes in consumer preferences that you have noticed?
The industry is evolving very fast. The consumers are now very well-connected to the world. The most prominent change that I notice is the inclination towards social networking. People now like to share their information. We?re trying to capture this trend. The other in-thing is the emergence of smartphones. Everything is turning to touch, better viewing and megapixels. Mobile phones are no longer just a communication device. They are more like companions. Earlier, smartphones were business-driven, but now it has become more of a lifestyle accessory. In next four years, I expect smartphones to contribute 16-18% of the overall mobile business. The third trend is the 3-G. Now that licences have been granted, 3-G will become the favoured option as it will make life easier and faster. Finally, the retail experiences are coming alive today. A large percentage of consumers go to the internet to know about the products, but the experience there is not the same as in retail. We are focusing a lot on the retail experience, which is all about opening up the bouquet of products for a better understanding from the consumer?s point of view. We will launch 100 such LG Galleries which will include shop-in-shop and demo phones.
Why have you opted for so many brand ambassadors?
The strategy of selecting brand ambassadors has to be linked to the consumers. India is such a young market with an average age of 24 years. That?s the consumer group which is driving the mobile business in India. And if you look at these people, you see it is all about collective fun and sharing, rather than being an individual. This is why we thought of having a group of young celebrities. John Abraham, Abhay Deol and Genelia D?Souza have these characteristics. They are today?s youth icons and we tried to create a consumer connect through their youthfulness.
What are you plans for the semi-urban and rural markets?
The next growth will come from these tier II and III cities. We have created an extensive network to reach out to these areas. We have 13 national distributors, which are working with 400-plus city distributors who are reaching out to 20,000 retail outlets today. We are making sure that we reach out to as many places as possible. The other area where we are investing more and more is customer service. We are trying to strengthen the trust and reliance of our customers spread across 700 towns across India. From our marketing point of view, we are investing more than Rs 250 crore. This includes advertising and retail investment.
Do you think the CDMA (code division multiple access technology used by a few operators) segment is dying gradually?
Yes. With the advent of GSM (global system for mobile communications which is the most popular standard for mobile telephony) and with so many operators, consumers do get a wider choice. Also, the range of handsets available in the markets is pushing the CDMA segment to the periphery. CDMA is gradually turning towards an open market from being operator-driven. We are gradually focusing on an open-market format.