Why smartphone dual-branding won't work in India

Last Updated: Mon, Apr 30, 2018 12:45 hrs
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New Delhi: 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.




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