ZTE is a Chinese mobile handset company interested in entering the Indian market. It plans to partner with private Indian telecom providers and target metro areas with high population growth. The strategy proposes low pricing initially to gain market share in India's price sensitive market and compete against other established brands. Factors like government support, R&D customization, and targeting both urban youth and rural populations may help ZTE succeed in India.
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Sample market entry analysis
1. ZTE MOBILE HANDSET IN
INDIAN MARKET
MARKET ENTRY & BUSINESS PLAN 1
F&S_Interview Case Study
2. AGENDA
• Company Overview
• Assumptions
• Forces impacting the Indian Market Entry
• Challenges
• Competitor Analysis
• Pricing
• Future
F&S_Interview Case Study 2
3. COMPANY OVERVIEW
• ZTE Corporation – Mobile Handset Company
• Objectives – interested in entering Indian Mobile
Handset market
• Location preferences : Metros in India
• Partner with Service providers
Reference: ZTE Corporation, China
F&S_Interview Case Study 3
4. ASSUMPTIONS
• Government Regulations followed and approved
• Indian Demographics for Mobile Market
• CLASSES
• Smart Phones
• Business Phones
• MASSES
• Text Phones
• CDMA / GSM Handsets
• Proposal includes Location, service providers in
partnership, pricing model for the handsets.
F&S_Interview Case Study 4
5. PORTER’S 5 FORCES
Competitive Supplier
rivalry Power
Threat from
Buyer Power new
entrants
ZTE
Reference: Pluggd.in, MarketResearch.com
F&S_Interview Case Study 5
6. MARKET ANALYSIS
• Indian Demographics
• Mobile handset issues every month – 10,000,000+ handsets
every month
• Growth of ~10% every year
• Estimated figure for 2012 = 175 million handsets in India
• Indian mobile market growing at high
rate, surpassing China
• Government helping the service providers to grant
license for GSM services
Reference: Wikipedia, Bplans.com, Economictimes
F&S_Interview Case Study 6
7. MARKET ENTRY STRATEGY
• Indian market has huge potential
• Attracting many mobile handset manufacturers
and service providers
• Intense competition and price war for low cost and
squeezed profits. High end Usage – Price Sensitive
market
High end High End
usage usage –
Low High
Price Price
Low end Low end
Usage – Usage –
Low High
Price Price
F&S_Interview Case Study 7
8. ANALYSIS USING 7P FRAMEWORK
Ref: Self Analysis F&S_Interview Case Study 8
9. MARKET ENTRY STRATEGY
• Indian Market has Private and Public owned service
providers.
• ZTE enters India partnering with one of the Private
owned companies like TATA or Reliance
• Penetration in metros like
Delhi, Ahmedabad, Mumbai, Pune, Bangalore, Kolk
ata where majority of states have fairly good split
between the Rural and urban population spread
• Entry level mobile phones for Urban populations
targeting the teens along with entry level phones for
rural population which is a growing and enthusiastic
sector market.
F&S_Interview Case Study 9
10. MARKET ENTRY STRATEGY
• Three factors that can help ZTE mark its presence in
India
• Low cost pricing strategy in the initial phase of its
entry, providing handsets at low price and maximum
features, thus overcoming any impact due to financial
crises
• Financial Support from the Chinese government and
financial institutions in the initial phase to promote such
high-tech enterprise to enter a different country and
expand its geographic reach.
• due to dynamic nature of mobile handset market, ZTE
should be prepared with its RnD facilities for advanced
customization and invent the handsets to cater the needs
of Indian users.
F&S_Interview Case Study 10
11. FINANCIALS
Year 2011 2010 2009
Sales
88789.3 72903.7 61996.1
COGS (variable)
61184.5 48599.0 41667.8
% of sales 69% 67% 67%
Gross Profit 27604.8 24304.7 20328.3
%Gross Margin 31% 33% 33%
Sales & Marketing -10855.7 -8890.2 -7157.8
Research & Development -8520.8 -7092.0 -5781.6
Gen’l & Administrative -2981.4 -2524.0 -2735.2
other expenses -942.0 -753.8 -603.2
Total Operating Expenses -23300.0 -19260.0 -16277.8
Interest -226.3 -226.3 -237.6
Net Income Before Taxes 4078.5 4818.4 3812.9
F&S_Interview Case Study 11
12. • This is an opportunity for ZTE to
gain the Competitive
advantage over other mobile
handsets.
F&S_Interview Case Study 12
ObjectiveZTE wants to enter the Indian Market and wants to launch their handsets in India. As a Consultant, We performed the analysis of the Indian Market and prepare the Market Entry strategy and the Business Plan.
AgendaThe following slides cover the Brief company overview and their objectives followed by the necessary assumptions considered before we present the proposal. We will discuss about the external and internal forces that impact the
Assumptions considered for the case:All Legal Governmentregulations have been fulfilled and ZTE has approvals to launch the Mobile handsets in India.Indian Demographics have been studied and assumptions about the population and Handset market considered wherever necessary.ZTE wants to launch the Handsets for High end mobile users and at the location which are 3G enabled along with normal entry level handsets for rural areas.
Statistics show that Mobile Industry has shown tremendous growth crossing 100 million mobile handsets that were issued in India in 2009. Following are the forces that can impact the entry of a new Mobile handset vendor.Barrier to Entry – LowThis has been assumed that legal barriers to entry i.e. Government regulations and approvals have been met and granted by the Indian Government.New Entrants/substitutes – HighStatistics show that 27 mobile handset vendors entered in just one quarter launching all range of handsets from Entry level to smart phones for business executives.Buyer Power – Low (Opportunity)Key point here is to analyze the below mentioned points: 1. How aware are buyers on the mobile handsets in market and offerings? 2. how price sensitive are they? 3. Are they brand conscious?Out of 50% of total Indian population between 20-50 years range, maximum percentage of buyers in India are demanding more features and variety in low prices, hence being price sensitive and this can affect the Churn rate. Hence ZTE has to be careful in pricing the models and targeting the audience. With new offerings in the handset like Dual sim, 3G compatibility, better camera features, applications etc.Competitor Rivalry – ModerateLargest market share holder : Nokia – 58%, followed by Samsung – 10%, LG – 8%Apart form this, growing players like ConvergeM, Mobile Store, Univercell, HotSpot, SubhikshaetcSupplier Power
Indian population – 1.2 billionMobile handset issues every month – 700,000+ handsets every monthGrowth of 6-8% every yearEstimated figure for 2012 = 175 million handsets in India
Due to the great potential in the Indian market, all major global organizations have chosen India as their key market. At the same time, owing to the intense competition, operators make all efforts to minimize their costs, resulting inprice pressureAs per the matrix shown above, the Indian Market is a low-price but high-quality market rather than a low-price and low-quality market. Therefore, it is a big challenge to all suppliers including ZTE to meet the requirements of the Indian subscribers.
In addition to the matrix shown before, we can study the feasibility of ZTE to enter the Indian market using 7P Framework as well which consist of:Product – As stated earlier, this analyses the feasibility of launching a smartphone and and entry level handset in India considering the technology adaptability and readiness of the country. The country subscribers are in enthusiastically looking for innovative products and best in built features and value add services.Price – Since ZTE is entering the Low Price – High End market, hence they need to adapt a low cost pricing model to penetrate in the market and make its stand. Gradually it can increase the prices of the handset once they reach the break even and then provide VAS (Value Added Services) to the customers to sustain the relationship with the customers.Place – Considering the Urban and Rural population split of the states, ZTE should focus on all the metros in the coutnry to launch their handsets in the initial phase and eventually expanding their reach to the other locations. The Golden Quadrilateral (Delhi – Mumbai – Chennai – Kolkata) wil be the best option for ZTE to initiate the marketing.People – Targeting the right audience is again a crucial point to distribute the handsets. Along with this, best in class workforce for enhancing the customer services will help them gain confidence and satisfaction among the customers.Promotion – Distribution channels and Online Marketing will help ZTE promote their brand. Partnering with the service providers like TATA and Reliance wil also help them make their stand in the respective locations.