Ramnik Singh Kohli: Federal Chains Play the Lead in Russia
– Micromax has worked in the Russian market for already four years. How would you estimate the company’s current state? Which difficulties did you have to face and how did you manage to solve them? Such as, for instance, mentality difference.
– Micromax holds a rather stable position in Russia. For the last two years, we have firmly claimed a 5% market share as per the items quantity, since we sell 3 mln phones annually. Currently the company is working all over Russia. Our partners include both major federal retail chains and communication providers like Svyaznoy and Beeline as well as independent regional retailers.
The main difficulties are linked to the market structure, which radically differs in India and Russia. For example, federal retail chains cover 70% of the Russian market unlike India, where more than 75% are controlled by small retailers, which own up to five-ten shops. It was really difficult to make deals with chains and providers. At the same time, Micromax ranks first in the quantity of the units sold and third in profit among regional independent retailers, which hold from 25% to 30% of the Russian market. As for mentality difference, this is barely an issue.
– What are the main difficulties in relations with the chains? Are you planning to establish your own retail chain in Russia?
– Federal chains are suspicious and doubtful about all new brands. First of all, they analyse brands’ market behaviour and potential popularity, and only after that include their products in their product lines. So it is difficult to make arrangements with them. In addition, they have their own established margin percentage which the brand should provide. It is also necessary to help chains sell goods to the final consumers. Today Micromax has established itself in the market, making it easier to negotiate. That is why we have no plans to create our own retail chain, instead we are trying to help our partners sell our products and get profit. We don’t want to compete, we want to cooperate.
– How do marketing approaches to product promotion differ in India and Russia? Which methods work for you and which for us? Roughly speaking, what Russian customers fall for and what does not work out for us?
– We take a completely different approach to federal chains and independent retailers. We actively engage retailers into various motivating programmes, carry out advertising campaigns together, work on selling out (i.e. selling goods to the final consumer). As for the federal chains, we limit ourselves to promo offers and advertising campaigns, which promote our brand while specifying at the chain where one can purchase our goods.
As for dysfunctional methods, print advertising barely works in Russia anymore. Its quantity considerably shrinks each year, whereas in India it still holds its popularity. Digital advertising is the most effective instrument here.
– Once you mentioned that you often travel across Russia to talk to retailers and that your company has a motivating system for the sellers. Tell us about it in detail. Does this direct communication increase brand loyalty? What “tricks” do you also use when working with retailers?
– Yes, I often go on business trips across Russia and have visited many regions, from Southern cities to the Far East, I often come to small towns as well. It is explained by our really close relations with independent retailers, where we enjoy quite a big share, as I have already mentioned. Thanks to this, we understand what they need in order to sell Micromax. Our motivating programme fully reflects what our partners require and significantly increases brand loyalty. Our individual work is two-fold: we attract consumers directly to a shop and organize a special brand zone inside, so a customer can, so to say, taste the product.
– How would you assess saturation of the Russian market? To which extent is the B-brand segment full?
– Both Russian and Indian markets are quite saturated. There is a huge demand for brands, thus many distributors fly to China, where they simply print their brand logo onto cheap phones and bring them here. At the same time, Google and other companies take certain measures so that only licensed Google products could enter the Russian and Indian markets. That is why I am sure that the market will consolidate over brands and only those working with such partners as Google and licensing their goods will get the sales.
– How are you planning to further develop the brand in Russia? Are you thinking about expanding the product line?
– Micromax differs from other brands as it issues about 30 new products a year. We constantly monitor the market, study its demands and renovate our line accordingly, this is a normal tendency. August will see 8-9 new school and university student-oriented products. Our brand counts on this segment very much, soon there will be more detailed information about the specialties.
– What is the company’s development strategy at large? As far as we know, you are active in Bangladesh, Nepal and Sri Lanka. Are you planning to enter other markets, which ones and when?
– As for the company’s strategy, we strive to democratise the product. We believe that people who cannot afford expensive gadgets have the right to use the latest functions and novelties. That is why we try to introduce the newest technologies in our segment.
First of all, Micromax intends to get stronger in Russia and CIS before planning to enter the European marker. However, currently we are working at all countries of the Customs Union, this year we entered Georgia and Azerbaijan. In fact, the business environment of these countries is almost similar to that of the Russian market, the only thing being its significantly lower volumes.
By Peter Merezhko.