“Out value porposition to customer had gone down because of Jio”
Gaurav Nigam, Head- Product at LAVA speaks on the portfolio and the strategic roadmap ahead for the company
What is the size of the current LAVA portfolio? How are the pricing and the product features plannned for the different models?
In feature phones, we are down to only 8 handsets and smart phones to 5 handsets. In feature phones, the range starts from 850 to 1800 consumer price and in smart phones range starts from 4000 and goes up to 10,000. We are focused on our approach and we are committing to what we have said; such focus brings lot of quality and experience inside the products.
This understanding gives us information about the features to include in a product. For example in feature phones, a lot of people use a feature called torch function; one has to first click button on top then and one has to click the other button then it gets unlocked then one has to click the torch button. We have a feature to directly click the torch without unlocking. Entry level consumers too have now started doing video calling a lot, the Whatsapp video call, Google Duo is now being promoted. We use Google Duo also and if you do video call, it acts a selfie camera. We have also introduced the flash for selfie.
What is LAVA’s policy on product refesh?
We keep on refreshing the portfolio. The general timeline we look at refreshing our portfolio for smart phones is between 7-9 months and for feature phones it is generally 1 and half years. Ideally I plan, so that I can refresh one model every two months. There is continuous excitement in the market that way, but as we all know in project management, things generally don’t always go as per the plan.
In terms of business, both feature and smart phones, what will be LAVA’s share of the market?
Let’s look at what has happened in last one year. Let me give you a small snippet of business. We are around 8 years old now in the industry. And we are the only company amongst the Indian players; (if you consider all the, brands put together), that has been consistently increasing its contribution for the last
One LAVA model is refreshed every two months
8 years. Around 8 years back we started back with the contribution around 8%. Today we have around 40-45 percent share, amongst the Indian players, be it feature or smart phones. If we consider the imports of last two-three months, I think the share is above 60% or so.
What would you attribute this success to?
In marketing we all studied in MBA the book by Philips Kotler, that we have 4 P’s of marketing; product, price, promotion and place. Product has been taken by Samsung and Xiaomi is there to play in terms of pricing. I think we have the place part i.e. the distribution, our reach and engagement with the channel, especially the reach has increased to 160,000 from 120,000 retailers. No district is uncovered; the cities of north- east also. We have 1100 distributors, and India has around 600 districts. The smart phone coverage outlets have also increased; earlier they were 50,000 and now have gone to 85,000. 160,000 is for feature phones & for smart phone it has gone to 50,000-85,000.
How many service centres does LAVA have? And how many customers are there?
- One Thousand Plus, service center are there? There are a lot of customers. Customers are because of the warranty. So whereever you’ve sold in the last 24 months are your customers now because you’ve to service them. There is 2 years warranty.
Where is the maximum traction happening in tier 3 or tier 4 towns, or in rural areas?
Feature phones always are popular in semi urban areas. In smart phone we see a hike in semi urban areas for our segment and urban also. In rural we just started to do something to migrate the feature phone consumers to smart phones; some pilots are underway.
We can handover them maybe for financing scheme.
How much has Jio helped in this traction?
Jio has really helped but there are both advantages and disadvantages. One cannot take away the fact, that the advantage is the pricing that Jio does.
The disadvantage is, one suffers when one tries to sell expensive feature phone one’s offering is not as competitive, and in amount of hardly 150 unlimited calling which none does. Our value proposition to the consumers gets lowered therefore this is the disadvantage we suffer because of Jio being there in the
market.
What about the category that shifted from feature phone to smart phone, where the price range is
4000 to 5000?
Around 1 year back the ratio between feature phones vs. smart phones, was 59:41, feature phone was 59% smart phone was 41%. Because of Jio it has increased. If you take out Jio from the calculation, features phone is only 50-53 percent, it is still not depleted as much as we or everybody hopes. The main reason behind this is the fact that the customer, who is using a 2G feature phone, doesn’t know the power of internet. We kept on talking about the shift of feature phone to smart phone, people will upgrade from feature phone to Smartphone but we however, don’t see it happening. The process is very slow.
How has been the pricing since you talked about the duty since we met 1 year of GST so in terms of the GST impact on sells how is that been?
In the initial time the sales had gone down because a lot of retailers did not have the GST numbers. Therefore our counters which were selling our products had gone down because the distributors were not billing to anybody who did not have a GST number. But that was the first 2-3 months struggle. Now we are again increasing our reach. Pricing is a market led phenomenon actually. It depends on how your competitors are playing in the market, your aspiration of shares and the kind of values that you build in the product. It is the mixture of these things on which you decide how to price your product.