The Motorola-Lenovo combine plans to strengthen its offline retail presence in a bid to increase foothold in what it expects to be a challenging Indian market over the next three years. The company, however, will take a call on expanding manufacturing once the new unified tax regime sets in.
Calling itself a challenger, the No 3 smartphone brand with 9.9% share as of December, will invest in setting up exclusive retail stores that will give hands on experience and sales for all phones, starting with pilots with large format retail stores such that half its sales comes from offline. Some new launches will include the Moto G5 and new Mods for the Moto Z.
"It’s going to be very challenging next three years, the top five brands will constitute 80% of the market, and they will be in the premium and sub premium segments and not so much in the bottom of the pyramid," said Sudhin Mathur, newly-appointed managing director of Motorola India, who also heads the Lenovo phone business in India.
The company plans to strengthen its offline strategy with expansion, with about 25-100 exclusive stores over the next three years. However, it will begin with about five to six stores in the near term. Currently, two-thirds of its business comes from the online channel.
There has been a lot of confusion around how Lenovo wants to project its Motorola division. While the company initially embraced a dual-brand strategy, there have been multiple reports about Lenovo’s efforts to have a more extensive presence on the Moto phones. Lenovo had planned to use ‘Moto by Lenovo’ branding on the Moto phones but now has given it a skip. Motorola India’s Managing Director Sudhin Mathur has now reaffirmed that Lenovo’s dual-brand strategy will continue in India, though Motorola will be positioned as the "face of the communication."
"We will continue with the dual-brand strategy in India and in some other markets. That’s the way it had been and will continue to be. How will we evolve over the period of time? We are on a transformational journey. We are looking at different geographies and seeing how consumers see us as and we will evolve from there," he commented.
Sudhin's comments come after Motorola Chairman and President Aymar de Lencquesaing revealed that the company was going to reinforce all its energy on bringing back the legacy of Motorola. He also revealed plans to expand Motorola’s presence in the US by extensive distribution and marketing. “Give us 12 months, and everyone in the US will know the new Motorola,” he commented.
In the US, which is Motorola’s native market, Lenovo initially showed some interest by scaling up the advertising expenditures but later reduced spending on the ads and product development. The brand slipped behind Apple, Samsung and even brands like ZTE. With modular smartphone Moto Z receiving positive response worldwide, the company now hopes its smartphone business is now set for success.
But in India, it’s a different story. Lenovo-Motorola combined flirted with the number two and three spots throughout in 2016. According to IDC’s report for Q4 2016, Lenovo-Motorola was at the third place with 9.9 percent market share whereas Xiaomi ranked second with 10.7 percent market share.
Counterpoint’s report says that Lenovo (including Motorola) ranks fourth with 9 percent market share in the fourth quarter of 2016 and at the third spot in the calendar year 2016 with 9 percent share. While Moto smartphones have been primarily focused online, Lenovo phones have both offline and online presence. According to Counterpoint, Lenovo led with 6 percent of the total share whereas Motorola had 3 percent in CY2016.
Going forward, Lenovo is going to expand its base its presence in the offline market. According to Sudhin Mathur, the company currently sells one-third of its phones online and rest offline. Lenovo aims to make more money from its offline market, he said. To achieve this, the company plans to start with exclusive stores in top three cities.
When asked about whether the company has plans to launch a 4G feature phone, he responded, “No. Our strategy is very clear, we will only be in smartphones.” On slowed migration from feature phones to smartphones, he pointed out, “Internet penetration in India has been relatively slow. Another reason is the price gap between feature phones and smartphones is very high. You can get a feature phone for say Rs 700 but a good smartphone will cost around Rs 4,000.”
