Analysis Of Market Entry Strategy Of Vivo For Telecommunication

Vivo's market entry strategy for Indian smart phone market

Discuss about the Analysis of Market Entry Strategy of Vivo for Telecommunication.

At a time when the industry of telecommunication stepped into the era of smart phone, Vivo marked its presence in the Indian smart phones industry. The leading brand of global smart phone company has started its journey in the year of 2009, as a sub brand of the company BBK electronics (Vivo.com 2018). Later in 2011, the china based company entered into the world of telecommunication with landline phones and wireless telecommunication sets. The company has addressed the market trend during the evolution of smart phones and started manufacturing its own range of smart phones in the year of 2014. The primary aim of this smart phone brand is to provide quality products as well as services at an affordable price. Vivo brought the innovation in the sphere of smart phone while making the customer’s life easier (Vivo.com 2018).

In industry that is highly competitive, the smart phone brand vivo entered with a strategy to provide best features of a smart hone at a low price. At a time, when the renowned brands like Samsung, Microsoft and others was competition with each other to serve the best smart experience in the industry, Vivo, addressed that the market need and brought revolutionary changes in camera specification (Statista 2018). It launched its product range in the global market with the high quality camera in order to attract the maximum customer area.

In order to capture the growing sphere of smart phone of India, Vivo entered into the Indian economy in the year of 2014. Launching it first smart phone model for the Indian market the company embarked into the competition with other giant brands like Samsung, Microsoft and many more (Statista 2018). As the Indian market of smart phone is price sensitive, the company intended introduce such a price range that is competitive in the market. The Vivo smart phone series available in the market has overall best features in it. Meanwhile keeping the market trend in mind and to compete in the industry, it designs its products in a way attracts the attention of the customers to buy it (Vivo.com 2018).

Within few months of its entry in the market Vivo has achieved a considerable profit from smart phone industry. Presently, the company serves over 40 cities of 22 states in the country. As per the market observe, the company has been able to give a tough competition with the giant brand that already had e good hold of customers in the market. In the year of 2016, the company introduced its major model of smart phone in order to strengthen its market position in the country. As a result of its innovative development of products, the company has witnessed significant sales in the past two years. Along with that, the demand of the Vivo smart phones is considerably high in the industry. Within three months of its launch of smart phone series in India, the company gained 21% share in the market. In the year of 2017, it also has acquired 7 percent market share (Statista 2018). Over the four years of existence in the Indian market, Vive has become a reliable brand of quality smart phones (Vivo.com 2018).

Vivo's success in Indian smart phone market

The smart phone industry is one of the largest industries in India that grows in a rapid speed. As the industry is growing rapidly, the customer requirement is also changing day by day. The leading brands as well as the new entrants in the industry are in continuous competition to serve new features to the customers in order to have a good hold of customers in the market (Mohan 2014). As per the reports, 2.5 million devices have been sold by the second quarter of the year 2017.

As the industry grows in rapid pace, a significant amount of new companies have been entering in the industry with new offers. Companies like Oppo, Redmi and Lenovo are continuously innovating new features and including them into their products, which push Vivo also to develop its product range and modify the product specifications (Vikram and Ramanathan 2015). As Indian economy allows small to large companies to entry so that the economic growth of the country can increase, the smart brands focuses on low price strategy to target the customers. The market report says that among the smart phone companies, Samsung holds the maximum market share in the industry that is 24% (Singh 2018). Xiaomi comes second with 17% and Vivo is in the third position with 13%. However, the growth rate of Vivo is comparatively higher than the other brands. In a very short time span it achieved considerable market share in the industry.

The smart phone industry of the country is price sensitive. Customers in India, tend to compare between the brands before buying a mobile phone. They mainly look for product with maximum features but at an affordable price. Only 7% of the whole population of India uses Brands like Apple that follow high price strategy (Vikram and Ramanathan 2015).

The major group of customers using smart phones is the young generation which accounts for around 61 % percentage. The second major group is the working professionals aged between 23-40 years (Mohan 2014). The large group of smart phone users, which is the young generation, looks for high quality camera other than any features while buying smart phones. Thus, the smart phone companies focus on the feature of high quality camera to persuade the customers to buy their products.

Many factors are there that affect the smart phone industry in India. Recently the economic reformation in the name of demonetization had a huge impact on the overall sales of the industry. The purchasing power of the customers too lowered during the initial period (Watkins Kitner and Mehta 2013). Therefore, it can be said that the Indian industry of smart phone is economically unstable. Meanwhile, another aspect geographical diversification has a significant influence on the industry. Sometimes it becomes challenge for the smart phone companies to set their product strategy. At the same time, the government of the country pushes the leading brands to produce smart phones that support iris-based authentication.

There are few strategies that companies adopt before entering into an industry. When a company decides to enter an overseas industry a variety of aspects are there to analyze before, such as risk, costs and controlling power in the industry (Vikram and Ramanathan 2015). Thus, market entry strategy can be defined as the planned method of serving products and services in a target customer area and market them there.

The smart phone industry in India

A company willing to enter in the overseas market, experiences three major challenges in terms of marketing, sourcing and investment and control.

The challenges of marketing includes the country, which the company intends to enter, the market segments and managing them, whereas the sourcing refers to obtaining products, manufacturing or buying (Glowik 2016). Investment and control means partnership and controlling power of the company in the new industry.

The market entry strategies are:

• Exporting,
• Franchising,
• Contract manufacturing,
• Completely owned manufacturing facilities,
• Turnkey contracts,
• Licensing,
• Joint venturing,
• Mergers and acquisition,
• Counter trade
• Third country location

Exporting:  the most traditional strategy is exporting that the companies adopt in order to operate in foreign markets. Exporting refer to the marketing of products from the country where the products have been produced to another country. In order to market the products successfully, significant invest is required (Glowik 2016). A company willing export in a foreign country needs to make strategies and plans in terms of product specification, price, and distribution and most importantly in terms of promotions. The response of export mainly depends on the demand of the product in that selected country.

Franchising: The practice of using the supplier company’s business model is known as Franchising. The company whose business model is followed needs to be a successful business in its domain (Holtbrügge and Baron 2013). A franchisee distributes the supplier company’s product in the country using the trademark the company’s trademark. The operator or the franchisee pays a fee to the supplier company for using its trademark. Franchise can be considered as the alternative to the ‘chain stores’ in order to distribute the products (Varghese and Doshi 2013). The companies adopt the strategy of franchising in order to avoid the liability and investments of the chain stores because franchisees possess a direct stake in the supplier’s business.

Licensing: Licensing refers to the method through which a giant company of one country allows a company in another country to manufacture its products. Licensing is quite similar to the franchisee however; licensing demands little more expense than franchisee operation (Laufs and Schwens 2014). In order to implement the operation, both of the giant company as well as the other company required to sign legal agreement.

Joint ventures: Joint venture is one of the most common strategies that the organizations use in order to enter in a foreign market. In this strategy, two or more investors involve to share the ownership of the enterprise (Johnson 2016). All the investors share control over the operations as well as the property of the enterprise. In order to enter in the industry, a foreign enterprise collaborates with a local enterprise while strengthening the economy of the company (Laufs and Schwens 2014).

Counter trade: Counter trade is the indirect way of exporting strategy. The foreign companies invest more in the marketing of products (Holtbrügge and Baron 2013). Counter trade is adopted by the organizations for the markets where competition is less and mode of transaction is based on currency. In many countries, counter trade is used to encourage the home industries (Johnson 2016).

Turnkey contracts: the agreement between the seller and the buyer in order to construct and design of a project that will be ready to use after it is handed over to the client is generally known as the turnkey contracts (Varghese and Doshi 2013). This type of strategy is mainly used in the food chain business where the contractor to sub contractor is responsible for designing as well as building of the project or facility.

Challenges of market entry in foreign markets

Contract manufacturing: Some companies make contracts with firms located in foreign countries in order to manufacture the products (Johnson 2016). Most of the international companies like Ponds use this practice to while entering into a foreign company.

Third country location: It has been seen that, some countries do not have good relation between them. In such cases, when the companies of one the countries want to enter in the economy of the other, they find it difficult (Glowik 2016). As a solution to this issue, the companies operate from the third country base so that they can enter into market of that foreign country.

Mergers and acquisition: Popularly known as the expansion strategy, two or more companies adopt approaches of merge, acquisition and consolidation and so on (Varghese and Doshi 2013). This strategy helps the companies to grow in a rapid pace in terms of entering into a market. Mainly the acquisition of the technology is the main aspect for this type of market entry strategy (Glowik 2016).

Fully owned manufacturing: Some companies in order to acquire long term benefits by expanding g their business in a foreign country, establish completely owned manufacturing units in that country (Holtbrügge and Baron 2013). Most of the organizations in order to avoid the excessive cost of exporting, issues regarding trade relation, government policies of exportation often adopt this strategy (Johnson 2016).

In order to capture the growing market of the smart phones in India, the company Vivo has adopted different strategies. Initially, the company has started entering into the Indian smart phone industry by exporting its large variety of product range (Vikram and Ramanathan 2015). After it achieved its expected profit margin and the positive response from the Indian market, it had established its fully owned manufacturing cum assembly unit in the country. Through applying the strategy, Vivo has been able to minimize the cost of exporting of the products (Holtbrügge and Baron 2013). Meanwhile, the other issues regarding trade relation was also addressed by the Vivo through this strategy.

Vivo aimed to reach out to maximum customer target by providing the smart phone ranges with maximum features in the industry. It mainly focused on the camera and the high quality photograph to compete with the large smart phone brands in the industry (Glowik 2016). Vivo could address that there is a growing demand of the best quality camera within the industry and it planned its market strategy accordingly. The company presently secured its position among the top brands of smart phones in India (Varghese and Doshi 2013). The market demand of Vivo products is also high as its offers innovative features with latest design, which gives a tough competition to the brands like Samsung, Microsoft, Oppo, Xiaomi and many more. As the Indian market of the smart phones is price sensitive, the offers best features of a smart phone at an affordable price (Varghese and Doshi 2013).

To hold the industry, the also has used several marketing strategies to promote its brand in the country. Renowned celebrities from the film industry are hired to feature in the promotional advertisement of the company (Sadafule 2014). As a part of its further plan of expansion in the Indian economy, the smart phone brand Vivo it allowed many franchisees across the nation, which in turn in order to avoid the liability and investments of the chain stores (Andrews et al., 2016). As a result of different plans and strategies in enter in the market as well as to hold the position in the industry, the clammy witnessed a significant amount of sales and profit with a short time span (Kenney and Pon 2015).

Market entry strategies

The smart brand Vivo is one of the largest companies of telecommunication not only in India but also across the world. The company has addressed the market trend during the evolution of smart phones and started manufacturing its own range of smart phones in the year of 2014. The primary aim of this smart phone brand is to provide quality products as well as services at an affordable price. Vivo brought the innovation in the sphere of smart phone while making the customer’s life easier. The study intends to analyze the strategies that have been adopted by the smart phone company Vivo to enter in the Indian smart phone industry. The strategies adopted by Vivo included exporting, fully owned manufacturing facilities and franchising. During the initial days of its entry in the market of smart phones, it uses exporting strategy. Gradually, after achieving a position in the market, the company set up its own manufacturing unit with the strategy of franchising. The essay also discussed the other market entry strategies apart from the strategies adopted by Vivo. Hence, in conclusion it can be said that the study has tried to discuss all the aspects in order to understand the market entry strategies by Vivo.

References

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