ObjectiveZTE wants to enter the Indian Market and wants to launch their handsets in India. As a Consultant, We performed the analysis of the Indian Market and prepare the Market Entry strategy and the Business Plan.
AgendaThe following slides cover the Brief company overview and their objectives followed by the necessary assumptions considered before we present the proposal. We will discuss about the external and internal forces that impact the
Assumptions considered for the case:All Legal Governmentregulations have been fulfilled and ZTE has approvals to launch the Mobile handsets in India.Indian Demographics have been studied and assumptions about the population and Handset market considered wherever necessary.ZTE wants to launch the Handsets for High end mobile users and at the location which are 3G enabled along with normal entry level handsets for rural areas.
Statistics show that Mobile Industry has shown tremendous growth crossing 100 million mobile handsets that were issued in India in 2009. Following are the forces that can impact the entry of a new Mobile handset vendor.Barrier to Entry – LowThis has been assumed that legal barriers to entry i.e. Government regulations and approvals have been met and granted by the Indian Government.New Entrants/substitutes – HighStatistics show that 27 mobile handset vendors entered in just one quarter launching all range of handsets from Entry level to smart phones for business executives.Buyer Power – Low (Opportunity)Key point here is to analyze the below mentioned points: 1. How aware are buyers on the mobile handsets in market and offerings? 2. how price sensitive are they? 3. Are they brand conscious?Out of 50% of total Indian population between 20-50 years range, maximum percentage of buyers in India are demanding more features and variety in low prices, hence being price sensitive and this can affect the Churn rate. Hence ZTE has to be careful in pricing the models and targeting the audience. With new offerings in the handset like Dual sim, 3G compatibility, better camera features, applications etc.Competitor Rivalry – ModerateLargest market share holder : Nokia – 58%, followed by Samsung – 10%, LG – 8%Apart form this, growing players like ConvergeM, Mobile Store, Univercell, HotSpot, SubhikshaetcSupplier Power
Indian population – 1.2 billionMobile handset issues every month – 700,000+ handsets every monthGrowth of 6-8% every yearEstimated figure for 2012 = 175 million handsets in India
Due to the great potential in the Indian market, all major global organizations have chosen India as their key market. At the same time, owing to the intense competition, operators make all efforts to minimize their costs, resulting inprice pressureAs per the matrix shown above, the Indian Market is a low-price but high-quality market rather than a low-price and low-quality market. Therefore, it is a big challenge to all suppliers including ZTE to meet the requirements of the Indian subscribers.
In addition to the matrix shown before, we can study the feasibility of ZTE to enter the Indian market using 7P Framework as well which consist of:Product – As stated earlier, this analyses the feasibility of launching a smartphone and and entry level handset in India considering the technology adaptability and readiness of the country. The country subscribers are in enthusiastically looking for innovative products and best in built features and value add services.Price – Since ZTE is entering the Low Price – High End market, hence they need to adapt a low cost pricing model to penetrate in the market and make its stand. Gradually it can increase the prices of the handset once they reach the break even and then provide VAS (Value Added Services) to the customers to sustain the relationship with the customers.Place – Considering the Urban and Rural population split of the states, ZTE should focus on all the metros in the coutnry to launch their handsets in the initial phase and eventually expanding their reach to the other locations. The Golden Quadrilateral (Delhi – Mumbai – Chennai – Kolkata) wil be the best option for ZTE to initiate the marketing.People – Targeting the right audience is again a crucial point to distribute the handsets. Along with this, best in class workforce for enhancing the customer services will help them gain confidence and satisfaction among the customers.Promotion – Distribution channels and Online Marketing will help ZTE promote their brand. Partnering with the service providers like TATA and Reliance wil also help them make their stand in the respective locations.
Reference: Attached excel sheets and figures
Sample market entry analysis
ZTE MOBILE HANDSET IN INDIAN MARKET MARKET ENTRY & BUSINESS PLAN 1 F&S_Interview Case Study
AGENDA• Company Overview• Assumptions• Forces impacting the Indian Market Entry• Challenges• Competitor Analysis• Pricing• Future F&S_Interview Case Study 2
COMPANY OVERVIEW• ZTE Corporation – Mobile Handset Company• Objectives – interested in entering Indian Mobile Handset market• Location preferences : Metros in India• Partner with Service providersReference: ZTE Corporation, China F&S_Interview Case Study 3
ASSUMPTIONS• Government Regulations followed and approved• Indian Demographics for Mobile Market • CLASSES • Smart Phones • Business Phones • MASSES • Text Phones • CDMA / GSM Handsets• Proposal includes Location, service providers in partnership, pricing model for the handsets. F&S_Interview Case Study 4
PORTER’S 5 FORCES Competitive Supplier rivalry Power Threat from Buyer Power new entrants ZTEReference: Pluggd.in, MarketResearch.com F&S_Interview Case Study 5
MARKET ANALYSIS• Indian Demographics • Mobile handset issues every month – 10,000,000+ handsets every month • Growth of ~10% every year • Estimated figure for 2012 = 175 million handsets in India• Indian mobile market growing at high rate, surpassing China• Government helping the service providers to grant license for GSM servicesReference: Wikipedia, Bplans.com, Economictimes F&S_Interview Case Study 6
MARKET ENTRY STRATEGY• Indian market has huge potential• Attracting many mobile handset manufacturers and service providers• Intense competition and price war for low cost and squeezed profits. High end Usage – Price Sensitive market High end High End usage usage – Low High Price Price Low end Low end Usage – Usage – Low High Price Price F&S_Interview Case Study 7
ANALYSIS USING 7P FRAMEWORKRef: Self Analysis F&S_Interview Case Study 8
MARKET ENTRY STRATEGY• Indian Market has Private and Public owned service providers.• ZTE enters India partnering with one of the Private owned companies like TATA or Reliance• Penetration in metros like Delhi, Ahmedabad, Mumbai, Pune, Bangalore, Kolk ata where majority of states have fairly good split between the Rural and urban population spread• Entry level mobile phones for Urban populations targeting the teens along with entry level phones for rural population which is a growing and enthusiastic sector market. F&S_Interview Case Study 9
MARKET ENTRY STRATEGY• Three factors that can help ZTE mark its presence in India • Low cost pricing strategy in the initial phase of its entry, providing handsets at low price and maximum features, thus overcoming any impact due to financial crises • Financial Support from the Chinese government and financial institutions in the initial phase to promote such high-tech enterprise to enter a different country and expand its geographic reach. • due to dynamic nature of mobile handset market, ZTE should be prepared with its RnD facilities for advanced customization and invent the handsets to cater the needs of Indian users. F&S_Interview Case Study 10
FINANCIALS Year 2011 2010 2009 Sales 88789.3 72903.7 61996.1 COGS (variable) 61184.5 48599.0 41667.8 % of sales 69% 67% 67% Gross Profit 27604.8 24304.7 20328.3 %Gross Margin 31% 33% 33% Sales & Marketing -10855.7 -8890.2 -7157.8Research & Development -8520.8 -7092.0 -5781.6 Gen’l & Administrative -2981.4 -2524.0 -2735.2 other expenses -942.0 -753.8 -603.2Total Operating Expenses -23300.0 -19260.0 -16277.8 Interest -226.3 -226.3 -237.6Net Income Before Taxes 4078.5 4818.4 3812.9 F&S_Interview Case Study 11
• This is an opportunity for ZTE to gain the Competitive advantage over other mobile handsets. F&S_Interview Case Study 12