Satyesh Satyendra

Epgpx02.031
Case Study – LAVA
Problem:
Based on the thorough analysis of the Company current Situation, three major problem
areas has been identified:
a) Product Portfolio Rationalization
Large number of products line with varied features. New Models eating away market
for predecessor models.
b) Buyer’s perception about product and quality concerns.
Although product quality was worked upon and improved, however the buyer’s
perception towards the product remain unchanged.
c) Market segments rationalization.
Undecisive on the product prioritization thus focusing on both feature as welll as
smart phone segments.

Current state:
1) Product rationalization done for Fearture phone and Smart phone have not
been appropriate. The Models which shows negative Market growth rate are
the ones generating most revenue for company.

Even after product rationalization their top models are not doing good.
From Exhibit1, their Volume sales is increating each year for both Feature phone
as well as Smart phone however their revenue is not growing proportinately
which means only low margins phones are getting sold more.

2) Initiatives taken for Marketing and Sales distribution improvements failed to

brign any difference, Product lines although have improved quality but still
percieved as poor product. Marketing and distribution initiatives were taken
at local level mainly focused on regional sales and schemes offered were
through DSEs which were aain regional efforts. Thus buyer’s perception
regarding the quality has not been improved at large scale.

Market Share is descreasing – 8.5 % in 2016 (less than as compared to last

two years).

3) Delima to focus on feature phone or smart phone for future growth.

 Increase in year on year revenue is seen in both the product lines.

Decision:
1. Focus mainly on feature phone as there is less competition as compared to
Smart phone segments. Companies like Apple which have brand recognition
and inelastic towards price dont have any presence in the feature phone
segment. Similarly all new Chinese brands like ViVo, Oppo have their focus
on Smart phone market only.
2. Product rationalization is required in both the segments of Feature Phones
and Smart Phones. Need to push prodcuts which have higher margin which
means company should less promote the other models.
3. Re-branding at national level and competing with Chinese competetors could
be damaging in terms of expenses vs returns as they have deep pockets and
have already established their market alogn with customers trust on quality
which is biggest challenge for Lava.

Supporting Facts:
1. India 2nd position in world after China in the list of Global Markets.
2. Grew 1.12 lac Cr in 2015- I.36 lacs crs in 2016 – 22% rise in revenue for Indian mobile
handset market.
3. 3 categories;
a. Top range (> 35000)- Samsung and Apple
b. Medium range (10000-35000)- Samsung, oppo, vivo
c. Low and feature phones (<10000)- Samsung, various Chinese and Indian
vendors.
4. In Q1 2017, Indian companies-14% share, chines 45%.
5. Lava - A -1.8LB – Although its market share is decreasing but still its the top revenue
generator for LAVA in feature phone segment.
6. Lava - H – 2.8 SBB – Provides a much better margin of Rs. 2985 and thus can become
top revenue generator.

Recommendation:
Company should focus on Feature phone market segment where competetion is
not cut throat unlike Smart phone segment.
Smart phone market is already lead by big players like Apple and Samsung where they are
providing cutting edge technology solutions having inelastic price.