India festive season is just around the corner. Smartphone manufacturers are leaving no stone unturned to make it more exciting.
India’s top smartphone brands such as Samsung, Realme, Oppo, Vivo, and Xiaomi will reportedly offer higher margins as well as some out-of-the-box incentives to retailers to make the most of this upcoming festive season.
Surprisingly, these brands are willing to go out of their way to offer retailers incentives such as international trips, Covid-19 insurance, and helping out with their household chores, such as grocery shopping, electrical works, and plumbing, to boost their smartphone sales during the festive season.
Deepak Nakra, offline sales head, Realme, said that the company will provide Covid-19 insurance worth Rs 2 lakh to retailers, in addition to assisting them with groceries, electrical work, plumbers, and other necessities, so that their families can be at ease while they work. Realme is one of the top 5 smartphone vendors in India.
A Mumbai-based retailer who is a member of Samsung’s President Club said “if you are part of the Club and meet your targets, then there is an all-expense paid international/domestic trip. This was not there last year when we were given robot vacuum cleaners, exercise bikes, etc.”
Despite this, smartphone brands may struggle to meet demand this festive season due to supply challenges. This could result in a 5-15% decrease in headset shipments, as per Faisal Kawoosa, founder of tech market research firm TechArc.
Marketing Strategy of Smartphone Brands
Shashi Sinha, chief executive of media buying group IPG Mediabrands said that headset makers continue to spend on advertisements in order to attract more eyeballs of users from tier 1 and tier 2 cities in India. In fact, companies are expected to promote models that remain unaffected by the shortage of chips.
Smartphone brands will also have to be careful about where they spend their advertising dollars. Due to the Covid-19 pandemic, most people are avoiding outdoor activities, such as traveling, shopping at malls, going to movie theaters, so brands will spend on outdoor advertising only in specific places with higher footfalls.
It is important to note that the festive season, from September to December, accounts for about 40-50% of the annual ad spending by smartphone makers in India.
Brands Pushing the Sales of High-Ends Devices
Due to inventory challenges, some smartphone companies are pushing mid and high-end devices that priced more than Rs 15,000, at the cost of lower-priced devices.
A Jaipur-based retailer said that smartphone companies instructed them to first push the sales of devices costing Rs 15,000 or more, instead of cheaper devices. And, once they cross the targets, they can increase the margins as well.
Xiaomi, the market leader, will offer better margins to its “preferred retail partners” if they sell some high-end smartphones that are currently in stock.
One must note that margins of handset players vary between 3% and 9% depending on the model.
Food for Thought
The smartphone market in India experienced a drop in device sales during the second quarter, mainly due to the increasing Covid-19 cases in the country. However, the demand for smartphones has revived and is expected to increase more during Diwali which is India’s biggest festival. Therefore, all smartphone companies are trying their best to capitalize on this opportunity, which will result in increased market share. The sales during the Diwali festival will have a significant impact on how the year unfolds.