LAVA case Study Decision sheet

Name: Kaushal Dhapare

Roll number: 069 (epgpx02.069@iimrohtak.ac.in)

Dilemma:

Due to drop in Market share of LAVA mobiles in 2017 compared to 2016, Mr. Gaurav Nigam, Product head
of LAVA mobiles must come up with strategy for increasing market share of LAVA mobiles & present the
same to Management team. He must address following points

 How can he manage LAVA product portfolio?

 Number of Feature phones & Smart phones models that company should keep in market to achieve
growth in revenue?
 Way to mimic the Chinese companies’ strategy and rework its whole marketing strategy for LAVA
mobiles to beat the Chinese competition in their own game?
 How can they become a market challenger without affecting their current revenue?
 How can LAVA change Customer’s perception about of being regarded as Low-Quality Mobiles?
 How can LAVA mobiles connect to rural parts of India & market itself to enhance its Brand visibility?

Current State:

 Company’s revenue growth and market share has declined significantly.

 Indian mobile handset market recorded a 22% rise in revenue at ₹1.36 lakh crore in 2016.
 In 2016, India had 355 million mobile users with 28% market penetration. The growth trends are on
the upward swing and show huge potential.
 In Q1 2016, Indian vendors held a 41% share of the Indian smartphone market, while Chinese
vendors held a 15% share. However, within a year the Indian vendors’ share fell dramatically, to
14% in Q1 2017 and the Chinese companies tripled their market share
 Lava currently has more than 50 models in its product portfolio and Gaurav plans to reduce it down
to 15 with possibilities of further trimming it down.
 Company has major 9 models in feature phone business but yet produces less revenue than 4
models in smartphone business.
 Growth and demand is higher for smartphones in the market.
 Lava currently has a poor image in the market, as customers perceive product quality to be less
consistent than that of its competitors.
 Lava is still playing in the low end of the smartphone market and majorly in feature phone market,
where margins are low & these phones are used by Uninterested people. Hence it should focus on
other segments of customers who are interested in smart phone technology & are not using
phones for just basic requirements.
 It appears that Lava does not have a good marketing strategy as their products and brand name is
not fully established in the market.
 LAVA case Study Decision sheet

Decision:

Product portfolio:

Based on the BCG matrix below, mobile phones identified as stars and cows should be continued in market
by further reducing the feature phone segment to 3 and increasing the smartphone segment to 6.

As demand for smartphone in the market is higher from the provided data and generates higher volume
with less quantity, selling and stocking it in market by exclusive distributors will not be a major hustle.

Segment focus:

 Based on the recent trend from 2013, where Smartphones are generating more revenue and is the
current growth segment, LAVA should focus on smartphone segment. However LAVA should
continue to run feature phone with fewer but consistent selling models.
 Launch of flagship phone at the range of 25k-30k accompanied by a medium range in 10k-20k
segment to seek public attention & attract towards LAVA phones so as to eliminate poor/cheap
brand perception. This will also allow Lava to play in the segment where there is comparatively less
competition.

Marketing strategy:

 Strategic Partnership with mobile phone carrier for increasing sales of existing phone – feature and
smartphone segment (Jio and Airtel); bundling of phone. This bundling option should be available
on: New flagship phones and phones that have low market share but high market growth. This will
help Lava to expand volume and also make a household name and penetrate its market presence.
 Selling campaign slogan: Desh ki Awaaz (will significantly help in touching Indian sentiments)
 Possibility of celebrity brand ambassador with appropriate product placement- IPL, Major Sports
league inauguration ceremony or upcoming movie launch. Additionally, with Billboards advertising
to promote name in the market and thus building a brand.
 Go to market strategy should be with respect to BCG; on knowledgeable people (not unintereted).
 Percolation in rural areas by setting customer service centres, exclusive distributorship and
company owned showroom.
 Reduce vendors for low quality issues- improve supply chain management and thus improve
quality. This will help change the perspective of people for low quality phones to a Quality phone.
 Feature phone to be relaunched/rebranded under different brand name – “Volcano” phones. This
will help clear differentiation in segments between feature phones and Smart phones.

A market challenger or a leader:

 A strong market challenger in Medium range and Low range smartphones categories.
 With reduced product portfolio and planned 3 feature phones, strive to be a market leader by
offering the exact features customer is demanding for.
 LAVA case Study Decision sheet

Supporting facts & BCG Matrix:

 LAVA case Study Decision sheet

Recommendation:

 Use the 3rd planned manufacturing site in Tirupati for manufacturing flagship and medium range
smartphone
 Eventually phase out 1-2 models every year in feature phone segment in next 2-5 years as revenue
starts being compensated with Smartphone segment.
 Focus on non-interested people and change customer perception about Lava going only with low-
end market phones. With changing market scenario where consumer is willing to spend more (as
can be seen from model H and S2-S4) which are on higher price segment in its respective segment,
Lava too have to move eventually to that segment to capture the market being early adopters.
 As Marketing plays a key role, it is important to adopt popular marketing techniques like a celebrity
brand ambassador keeping in mind the placement of product.