Sacrificing Short-Term Benefits For Long-Term Goals Helped Us Survive: Sunil Raina

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  • Lava Mobiles, as per several reports is one among the top five feature phone brands of the world
  • Sunil Raina mentioned in-house R&D, manufacturing and robust distribution infrastructure as biggest contributors to success
  • Lava serves 1,60,000 channel partners through a two-way app
  • Company’s next focus is on entry and mid-level smartphones
Sunil Raina, President & Business Head, LAVA

Last ten years have been a roller coaster ride for many mobile phone brands in India. While
some entered and captured the markets, others simply ceased to exist. More or less, brands from China were/are the ones that have been ruling the market. According to several reports by the likes of Counterpoint and International Data Corporation, at least four in the top five mobile phone brands list, continue to be from China.

On the other hand, an India-based mobile phones brand has not only survived the influx of foreign brands but has also made a big impact in the Indian feature phones market. Sunil Raina, president and business head, Lava, in an exclusive conversation with EFY ACE, shared how Lava has made it to the top five list of feature phone brands in the world.

Here are some interesting excerpts from the conversation

Q. Lava is the fifth largest feature phone brand in the world. What has been the secret recipe behind this success?

A. The answer to this question is very simple. From day one Lava has focused more on building the fundamentals of growing business rather than taking shortcuts for short-term gains. There were two key things that we did – one at the front-end and one at the back end. We choose long-term goals over short-term benefits.

When we ventured into the mobile phones business, the design eco-system for the same was non-existent in India. On the back end, we invested in a design house facility located in China. In fact, we were the only Indian company to have a design team (around 700 people) located in China. I must add here that no one at that time was interested in a design facility. This investment in design house was the first fundamental that we knew was essential for the long-term survival.

The second thing that we did was start our own manufacturing facility here in India. Instead of going with any third-party we wanted to ensure that the products we retail are made by us. To fit the back-end part in a nutshell, we have always ensured that everything related to phone making was in our control.

On the front-end, that we also refer to as sales and distribution side, we realised that while almost every brand goes to the same retailer and distributor for sales, there is still a lack of transparency. Our teams researched and found out that schemes and incentive programs run by a lot of brands are not transparent to the channel partners. The more the number of retailers and channel partners a brand tie-up with, the more the transparency gets lost.

It gets difficult to deliver the same message to every retailer and channel partner. Lava, to address this challenge, invested in a technology-based tool that connects the company to all its channel partners. We ensure that the same message is delivered to everyone in our sales and distribution chain.

Q. How do you differentiate between the long-term and short-term goals?

A. Lava sees mobile phones as devices that humankind is most attached to. The experience of using mobile phones made by different brands usually make the difference in a consumer’s mind. If you see the same from a channel partner’s point of view, they are also using feature as well as smartphones. When we started operations, Lava would launch an average of two to three models of mobile phones every month in the market.

This strategy was more encouraged by what the competitors were doing and less by what the consumers were looking for. Eventually, brands started exiting India and we realised that product experience, and not the number of models you launch in a year or a month matter. We re-visited our strategy, sat and discussed about giving focus to product experience rather than the number of launches.

As a part of the process, we shrunk our product portfolio from 70 models to around 10 models. The importance of product experience helped us find the differences between long and short-term goals.

Choosing the customer segment also guided us towards the differentiation between long-term and short-term goals. We designed and delivered mobile phones for people who had not used technology. Now we are at a point where we can easily start competing in the mid-level segment.

Q. Why did you decide to develop a system for the channel partners and retailers in India and how exactly did that help?

A. The mobile phone industry and channel partners work on promises. Brands usually promise a date that they transfer amounts to retailers. The system that we have developed is a two-way communication tool between the partners and us. It also enables us to directly transfer any amount in a partner’s bank account. In fact, we are the only mobile phone company that follows this exercise.

Building trust among channel partners was always among one of the fundamentals and this system has helped us develop that trust. Thanks to this system, Lava has not missed a single payment in the last two years. We pay our channel partners on the same date that is promised by us.

This platform connects our factories, mother warehouses, warehouses in states, distributors, our sales force and retailers with the help of technology. Every transaction that happens in the eco-system gets updated on our SAP. The best part is that anyone working in the Lava team can update information on this platform using a mobile phone.

Be it a distributor, retailer or an in-store promoter, if a transaction must be carried out, it will only be through this platform, there is no other way to carry out transactions for Lava products. Our channel partner uses this platform to raise complaints and give feedback as well.

From payments to complaints to product to scheme updates, our channel partners rely on just one platform. We now serve around 1,60,000 channel partners in India through this one system.

Q. Speaking of channel partners, which channel did you depend more on initially?

A. When brands from China started foraying into the Indian markets, there was a lot of cash burn happening over the online channel. The offline vs online war, especially for smartphones started intensifying. Consumers started switching to online because of deep discounts. Brands started following different tactics. Some created new separate brands for the online channel while some started selling the same products at different prices on different channels.

We decided to go offline route. The reasons behind the same included the consumers we wanted to serve and the channel partners we were associated with. Lava made it a point that whether on the online channel, or the offline channel, each of its products will be priced similarly. Coming back to the long-term goals again, we realized that the deep discounting was because of the cash-burn that was happening. One day (in the long-term) the brands will stop this cash burn.

It has always been the support and trust each other emotion between Lava and its channel partners. They have been there for us in tough times and we have been there for them. The same has also helped us extend channel presence in all parts of the country.

Q. You mentioned that in-house design team, R&D and manufacturing also played a great role, please elaborate.

A. We used to have a 700-members team working on design and R&D in China. Now Lava does most of that work from India. The China team was working on designs of smartphones till now. But we have already started that entirely in India now.

The point is that we started designing feature phones for Lava way back in time. We slowly understood that third party design houses keep multiple consumers (brands) in mind while designing feature phones. Such designs are more brand specific and less of end-consumer specific.

How the in-house design team helped Lava in the long-term was it designed feature phones around consumers in India. It’s very simple, if you want a mobile phone to be equipped with localised features and capabilities, you cannot depend on designers sitting outside the country. The Lava Pay service that works without internet is a testament and biggest example to that.

Q. Can you give us any other example of the localised design part?

A. A lot of mobile phone consumers in rural areas of India ranks mobile with loudspeakers and big batteries as their first choice. Then comes in line a mobile phone’s capacity to hold the amount of data. To achieve the same, feature phone must have a big battery and big speakers. This, at times, makes the feature phones look bulky and less appealing.

Our India design team solved this issue with brilliant designs beautifully. What makes us the number five feature phone brand of the world is the fact that our phones have very good speakers, exceptional battery life and good storage, and yet these do not look bulky.

The ability to do customisations in accordance to India has been one blessing that was not possible without having the in-house design team. The best part is that from end-consumers to channel partners, everyone plays an important role in designing these feature phones.

Q. What’s the next focus for Lava?

A. The key focus from here is going to be innovation in the feature phone to entry level to mid-budget smartphones. Lava is already working on features in devices specially customised for the Indian consumers. When I say innovation and features, I mean features that have never-ever been attempted or done before.

Our R&D team is already working in these features and we will announce many of these very soon!

Author – Mukul Yudhveer SinghAn avid reader, Mukul finds peace in books and technology. He’s as passionate about writing as he is about cricket and Playstation. If not writing or reading, you will most likely find him drawing tattoo designs or analyzing political campaigns.

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