Why smartphone dual-branding won't work in India

April 30 2018

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 In the ever-evolving world of  smartphones, a few mobile handset makers have been tempted to launch two  or even multiple brands in order to gain a larger chunk of the market  or create a presence across price segments.

The approach has so  far worked in some countries -- like in China -- but when it comes to  India, the dual-brand strategy hasn't been fruitful till date and has,  in fact, affected the vendors' long-term goals.

Let us look at two big Chinese vendors -- Lenovo-Motorola and Huawei-Honor -- who have gambled on this strategy in India.

Lenovo's  smartphone shipments in India were just short of a million units,  falling by more than 60 per cent (year-on-year) in the first quarter of  2018, according to Hong Kong-based Counterpoint Research.

The  last Lenovo-branded smartphone that arrived in India was Lenovo K8 Plus  in September 2017. Since then, there has not been any Lenovo-branded  device in sight.

Motorola, which has a better visibility and  brand value, has seen Moto devices being launched at regular intervals.  Motorola Mobility is strengthening its retail presence pan-India with  opening more and more "Moto Hubs".

Meanwhile, Huawei's sub-brand  Honor entered the list of top five most-selling smartphone brands in  India for the very first time in the first quarter of 2018. Honor  registered a 146 per cent growth in the last quarter.

Sensing newer opportunities, Huawei has now brought its premium smartphone "P20 Pro" to the country for Rs 64,999.

However,  its earlier avatar, Huawei P10, never made it to India. The last 'P'  series device that arrived in the country was "P9" in 2016. Since then,  Huawei has been promoting its sub-brand Honor.

The companies are  yet to accept the ground reality but the fact is that the Indian  consumers are not ready to accept dual brands from one vendor.

"The  dual-brand strategy is working fine for Huawei in China. However, we do  not have any such success story in India so far," Jaipal Singh, Senior  Market Analyst, IDC India, told IANS.

"That the Lenovo group is  gradually decreasing its dependency on the Lenovo brand in India is  evident from the fact that most of the devices shipped in India in Q1  2018 were Motorola, which enjoys stronger brand recall in India among  both consumers and channels," Singh noted.

According to  Counterpoint Research's Q1 2018 report, Lenovo and Motorola were out of  the top-five vendors' list in India after a long time.

"The  dual-brand strategy is not working for Lenovo-Motorola in India as they  have brought devices in almost similar price range, overlapping the  positioning in the market," Tarun Pathak, Associate Director at  Counterpoint, told IANS.

Having two brands makes sense if there is some clear demarcation aligned.

"Somewhere,  the messaging about Motorola being the choice of evolved users has  diminished prospects for Lenovo. Which user will concede that s/he isn't  an evolved one, hence go for Lenovo?," said Faisal Kawoosa, Head-New  Initiatives, CyberMedia Research (CMR).

Retailers had a strong  association with Motorola in the initial days of mobile revolution a  decade and a half back and are still interested to work with the brand.

"Lenovo's  decision to bet more on Motorola can work in its favour in the long run  because Lenovo's positioning was primarily around aggressive pricing,  which has weakened in the past few quarters owing to brands like  Xiaomi," Singh noted.

According to Kawoosa, it is better for  Lenovo to go for a single brand in India and, in that case, "Motorola is  any time preferred. They can however, always message something like 'A  Lenovo Brand.'"

In fact, the two-brand strategy hasn't worked for any player in the country.

"We  have Lava-Xolo and Micromax-Yu as examples. Without a brand having a  convincing reason to exist, it's better to have just single brand in the  interests of simplicity," Kawoosa told IANS.

Nick Reynolds,  Chief Marketing Officer of Lenovo, told IANS during the Consumer  Electronics Show (CES) 2018 in January this year that dual-brand  strategy of the company would be decided by the customer.

"If the  Indian customer views Moto as a premier product, we will position it as  such. But if the Indian customer looks for better priced product, our  strategy would be to use Lenovo as brand name," Reynolds told the  visiting IANS jounralist.

According to Pathak, Lenovo has a good opportunity to leverage Motorola's brand and enter new price segments.

"But  lately, most of their sales were from sub-$150 segment for both the  brands. Hence, it needs to refresh Motorola's "G" series and target the  market again with a multi-channel retail strategy," Pathak suggested.

Honor,  on the other hand, has launched a bunch of smartphones in the last two  quarters with several mid-range options like Honor 9 Lite and Honor 7X.  The variety and affordable pricing have helped the company enter the  top-five list for the first time in Q1 2018.

What applies to Lenovo is true for Huawei too to keep pace with the changing dynamics of the Indian smartphone market.

(Nishant Arora can be contacted at nishant.a@ians.in )

  • Source
  • IANS