Pantech is the latest Korean brand to enter the Indian cellular handset marketplace. In March, it launched its series of feature-laden GSM handsets; the G300 for the cosmopolitan woman and the G500 for the 'successful man'.
Pantech also teamed up with First Mobile India, a leading mobile phone distributor, for marketing and promotional support.
The timing of Pantech's entry into India is interesting. On the one hand it comes at a time when the booming market is poised for the next big leap. Despite heady growth prospects, Pantech cannot afford to ignore brand building. Very few have heard of Pantech, unlike LG and Samsung, which already have strong white goods brands in India. Pantech is also going after the top end, where brands such as Sony Ericsson and Nokia rule.
India, according to industry estimates, is set to emerge as the fourth-largest handset market in the world. It is expected to add 24 million subscribers this year, implying that the mobile market has finally come into its own. But the rash of new launches and models is creating short-term challenges, especially for newcomers: prices are falling.
A large proportion of the growth in the market has come from the pre-paid segment, which has expanded the mobile net to include lower income consumers. And the CDMA segment, powered by the launch of Reliance India Mobile's services, which are priced far lower than any competing operators, is skewing the market towards budget consumers. Nokia has responded with models for cost conscious consumers.
Developments in the handset market will also depend on the telcos. Though a lot of advertising highlights services such as photo-messaging, few believe these areas will generate huge business. Pantech's models boast a range of features, like digital camera, but even known brands such as Philips, Siemens and Alcatel, which are nevertheless struggling as they haven't been able to run sustained advertising, or tie up with telcos.
And Pantech will have to make sure it's differentiated from new entrants such as Sagem, Bird and BenQ.
DIAGNOSIS
RAJEEV KARWAL, Chief executive officer, Electrolux India
There are certain basic market requirements which any mobile phone player must get in place today:
First off, if anyone's in the market to offer a high priced range, then the brand must also look suitably upmarket and be firmly grounded in its brand positioning. Because if I am the target audience, then I have already heard about Sony Ericsson's P800, and any new brand must vie very hard with that to reach me, within my area of interest and world.
For this, you need sufficient budgets in place and a focussed strategy, because as a new player the challenge of cutting through the established players and also establishing a new, relatively unheard of brand is not going to be easy. Motorola has the huge backup of technology and brand presence, but it's not as successful.
Yet on the other hand, Sony Ericsson has managed to cut through in a relatively short span of time with exciting features and communication, which have made the difference for it. Pantech needs to focus on a strength that can make a significant differentiation for it in the market. Establish the brand in the slot the marketer feels its strength lies. If Pantech wants to be seen as an upmarket brand, then that has to be tackled. Wishy-washy communication will not take it anywhere.
BIJU JOSEPH DOMINIC, Vice-president, Mudra Communications
With extremely low penetration levels and one of the fastest growth rates in the world, the Indian mobile phone market has attracted every major global player.
Unlike many other markets in the world, both GSM and CDMA services coexist in the Indian market, making it all the more attractive for global heavyweights as well as regional players.
Nokia is a clear leader in the GSM market. Thanks to a tie-up with Reliance Infocomm, the leading CDMA service provider, Korea's early bird arrivals - LG and Samsung - both have a strong presence in the CDMA market.
Now the latest Korean export, Pantech, has launched two products, costing upwards of US$300. This is almost four times costlier than the cheapest Nokia phone.
Is this pricing strategy ideal for an extremely cost conscious market such as India? Even before the launch of their mobile phones, the names LG, Samsung, Sony and Panasonic were already well known in the Indian market owing to their presence in the white goods market. On the other hand Pantech is hardly known in the Indian market.
With such market realities to face, the question is whether Pantech can create a winning strategy to secure its share of the Indian market?
TREATMENT
Karwal's prescription
- It has to be prepared to spend on the brand in a sustained manner for the first few years. To counter aggressive rivals, Pantech has to keep spend levels at least at US$3 million annually.
- It has to keep changing its models fast at the high-end, as mobile phones are fashion accessories today and an image is built based on how fast a brand is able to offer new range/models.
- Get the price-value equation right as perception takes root quickly and it would be difficult to correct at later stages for a new brand.
DOMINIC'S REMEDY
- Focus on niche segments like urban teenagers and young executives, the segment with the highest tendency to change handsets regularly.
- Focus distribution and communication strategies on building the image of a fashion brand with retailers and consumers. The current strategy of using bus backs will not help establish its fashion credentials.
- After creating a strong presence in the top segment of the market, it should have a clear strategy to tap into the cost conscious mass market.
VITAL SIGNS
GROWTH IN CELLULAR SUBSCRIBERS IN INDIA
Year Subscribers (Growth %)
March-01 3,577,095
March-02 6,430,814 (78%)
March-03 12,687,637 (97%)
March-04 26,154,405 (106%)
Source: Cellular Operators Association of India
MARKET SHARES (%)
Nokia (32.6) Samsung (29.6)
LG (22.8) Motorola (5.5)
Siemens (1.4) Others (8.1)
Gartner estimates, Jan 2004