Today, India’s ICT sector represents an up-and-coming market. The expansion of the sector has been truly mind-boggling in the last decade. Hence, it is no surprise that multinational investors are drawn to the country like moths to a flame. The reason is not far to seek. One of the fastest-growing economies, India has a fast growth rate for computer and Internet use in the world.
Microsoft is one of those companies which realized India’s potential at the opportune time. The announcement of Microsoft one year back to invest $1.7 billion in India over the next four years to expand its operations bears testimony to the company’s increasing appreciation of the Indian market.
Microsoft has positive growth in India where the local IT market is of considerable size. The Redmond-based software giant realized India’s potential very early and started its India operations in 1990. Since then, India is – and remains – a crucial market for Microsoft. Since its advent in India, Microsoft has devoted considerable resources to building its India business. A decade after its first attempt at retail, the company has recently opened the first of its planned retail stores in the United States in an apparent effort to build buzz around its products.
Microsoft E&D Division is the retail arm of Microsoft and has a strategic approach to broaden reach and deliver best customer experiences. “Currently, we have a network of over 5,000 channel partners across over 100 cities in the country. We have a strong emphasis on creating a robust retail experience with large format retail stores and providing quality in store experience and a strong after-sales support throughout the nation,” says Ashim Mathur, Director – Marketing, Entertainment and Devices Division, Microsoft Corporation (India) Pvt. Ltd. “Reach and availability are the key focus areas for us and we continuously strive to get the best retail network for our products in order to provide best customer experience,” adds Mathur.
Retail is not something new for Microsoft Entertainment and Devices Division. “We have been a consistent retail player for many years through our various products. Over the past few years, we have focussed on strengthening our retail presence by further building on our strong dealer network and creating interest around the brand through consistent product innovation,” adds Mathur. “Our efforts are backed by world-class supply chain solutions that maximize business value for Microsoft products,” adds Mathur.
According to Microsoft, for any product, the most important factor is the first-hand experience of the product. Last year, the company introduced a number of new products across different categories which included Windows 7 FPP, Xbox 360 Arcade and a range of new products in its computer peripherals portfolio. “We have focussed on both organized and unorganized retail and tried to deliver the most compelling experience to our consumers. Microsoft Xbox 360 is a good example of how we have translated our understanding of consumers’ needs into interactive and satisfying retail experiences that have helped us build a rapport with consumers and communicate brand proposition and benefit of being more than just a gaming console much more effectively,” says Mathur. “We have always focussed on all modes of distribution and understood the collective value of these individual distribution channels for our business. As a business unit, we integrate all distribution channels to design, build, and sustain end-to-end systems for customers and partners involved in retail marketing, sales, finance, and supply chain operations.
The Indian channel community is on the growth mode, mirroring the growth of the entire Indian economy. Distribution and retailing in India is witnessing a huge change. There are various factors contributing to this dynamic change that include favourable demographics, growth in income, and raising consumer aspirations. The retail industry is experimenting with new retail formats and more and more large format retail stores are emerging, thereby providing opportunities for getting close to the customer through specialized demo units, experience zones, etc., creating a sophisticated and customized retail experience.
“On the Xbox front, we will be launching a number of blockbuster gaming titles like Alan Wake. These launches will augment support at retail as our strength lies in 900+ interactive Xbox 360 kiosk zones which have received huge appreciation from customers and business partners across the country for the interactivity and understanding of product at point of purchase,” says Mathur. “The retail segment has seen a rapid growth with the rise in consumer purchasing power and the increasing role of technology in day-to-day lives. And it is evident that PCs will be a necessary productivity tool and a lifestyle choice for an emerging economy like India. Retail, therefore, becomes an important sector to connect with consumers and help drive PC penetration,” says Yathindra Nath, Director – HSB (Consumer and Sales), Lenovo India.
That Lenovo has always targeted India as one of its biggest markets. A long-term growth market, India plays a significant role in the company’s global operations. In India, Lenovo commands tremendous brand awareness among consumers, loyalty and strength from its business partners. The Lenovo brand in India has been successfully positioned in India. The company has built a product portfolio that appeals to all business segments – enterprise, SMB and consumer.
Lenovo India ventured into retailing with its 3,000 range of transaction business products in March in 2006. Across India, Lenovo has over 125 Lenovo Exclusive Stores (LES), more than 225 Lenovo Multi-Brand Outlets and 17 Large Format Retail stores (LFR). Lenovo further strengthened its retail presences, with the launch of its flagship store in Delhi (October 2009). Going forward, it will expand and introduce new retail outlets in the Tier-I and Tier-II cities, which will sell a whole range of Lenovo products under the Idea and Think brand.
An emerging market like India bears great resemblance to that of China’s. There are similarities in products preferences, diversified sales channels, business environment, making it ideal for Lenovo to implement practices of China in India.
Lenovo revamped its business processes and systems in India to align them to that of its best practices developed in China, where the channel strategy created an effective channel experience. “Our aim is to build structured networks, focussing on enhancing and building on the existing base of channel partners to provide flawless service rather than simply growing the network,” says Yathindra of Lenovo.
In March 2006, Lenovo introduced its consumer range of products which marked its entrance into the consumer retail segment. Lenovo India revamped its business strategy in 2009 to build on our strong channel base. “To streamline operations with our business partners, we follow a two-tier model with four National Distributors who serve exclusive outlets and retail chains, and Regional Distributors who operate at a tier-2 level for the upcountry cities,” adds Yathindra.
Last year, Lenovo opened its first flagship store in Delhi. The flagship store creates a complete brand experience for Lenovo customers, who can experience all of Lenovo’s products from the Lenovo IdeaPad and Lenovo IdeaCentre range of consumer PCs, as well as ThinkPad and ThinkCentre range of PCs for businesses.
According to Yathindra, “The requirements for the resellers and retailers are quite different. Retailers are the direct management partners interacting with customers on a daily basis. Therefore, they need to be effective communicators in order to sell products – highlighting their features and the advantages they have over competition.”
Retailers are the first point of contact for the customers, and play an important role in influencing the purchase decisions. “To enable them to be more effective in their communication with the customers, we engage with them at different levels, investing time and resources to make them win in the market. Some of the initiatives we take include training the retailers and their staff in understanding customer requirements and product features; creating branding for their stores to attract customers and supporting them in building attractive product displays and advertising their stores,” says Yathindra.
“For resellers, the requirements are different. They need support in expanding their partner base, knowledge on how to enhance their existing partner foothold. Lenovo as a practice conducts road shows for their reseller partners showcasing its new products and sharing strategy to build transparency as well as to create a stronger interlock with business partners,” says Yathindra. Regional Distributers (RD), Lenovo Exclusive Stores (LES), Multi-Brand Outlets and Large Format Retail stores (LFR) contribute a significant part to the total revenues of Lenovo.
For the consumer segment in 2010, Lenovo will be focussing on expanding its regional distributors (RD), Lenovo exclusive stores (LES), Lenovo multi-brand outlets and large format retail (LFR) stores. “We will also leverage our strong channel base to get closer to customers with a strong product portfolio, exceptional products, and also pave the way for streamlined operations with our business partners. We also plan to roll out simpler versions of our exclusive stores across tier-3 cities as well,” says Lenovo.
For Epson, channel consolidation is an ongoing effort. “We have been consolidating our channels with focused efforts for almost last 4-5 years addressing both the First and Final Tier Partners,” says Epson.
Epson today has a two tier channel Structure with EAP (Epson Accredited Partners) on the Top close-to 180 across India. Tier Partner ECC (Epson Certified Channel) is numbered approximately at 5,000. Ramprasad, Sr. Business Manager, Consumer Product Group, Epson India, says, “40–50% of our sales is derived from traditional and modern retail stores.”
“The results of the last 3-4 years clearly indicate the success of our channel efforts. Apart from this, Epson is also proud to be among few companies who have carried their partner along with our growth path,” says Epson.
“Every year, we try to come up with something new for our partners in helping them to achieve their goals. The key Initiatives taken this year include the launch of nDimesnion Master series – 60-City Intensive Channel Education Programme with most innovative interactive tools given to channel. The company has also instituted nDimesnion 2010 Awards Programme for the Top 150 Final Tier Partner of Epson.
Finally… “The Indian retail market has gone through tremendous growth and change over the past few years, which allows us opportunities to further strengthen our hold on the retail front,” says Mathur. He adds, “Our main focus will be to deliver better and a differentiated retail experience to our customers. We will be launching a number of new products in our computer peripherals range and the strong presence in all the leading retail outlets will help us showcase the cutting-edge technology that our products represent and allow the consumers to truly get a feel of the products before they actually buy it.”
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Today, India’s ICT sector represents an up-and-coming market. The expansion of the sector has been truly mind-boggling in the last decade. Hence, it is no surprise that multinational investors are drawn to the country like moths to a flame. The reason is not far to seek. One of the fastest-growing economies, India has a fast growth rate for computer and Internet use in the world.
