Case Study: LAVA

Name – Burhanuddin Husain

Roll No- ePGPx02.049

Table A
Feature Phone
Sales Total Units Leader Sold Lava Sold Lava Revenue Lava Lava Can be
Sold Growth Share explored

A 126280181 24394496 9590337 8,151,786,141.00 -10% 8% 92%

B 33193278 3389475 3227085 3,114,136,947.00 6.71% 10% 90%
C 30960580 5220576 2150014 2,365,015,479.00 -33% 7% 93%
D 50902865 6246986 1767439 2,120,926,853.00 -7.20% 3% 97%
E 16038530 2116769 222755 334,131,966.00 24% 1% 99%
F 14211289 5681617 394753 710,555,784.00 -21.35% 3% 97%
G 12712461 1987336 264840 609,131,338.00 -1.78% 2% 98%
H 6395814 1471746 88778 265,002,330.00 371.32% 1% 99%

Table B
Smart Phone
Sales Total Units Leader Sold Lava Sold Lava Revenue Lava Lava Can be
Sold Growth Share explored

S1 29233662 9129752 2631030 9,208,603,455.00 -14.16% 9% 91%

S2 40656731 31919905 1492102 6,416,038,766.00 50% 4% 96%
S3 24438171 7699986 843116.9 4,637,142,954.00 40.88% 3% 97%
S4 35336436 16966405 530046.5 4,505,395,578.00 50% 1% 99%

Table C
Year FP Vol(in FP SP Vol(in SP Rev(in Cr) Total Feature Smartphone
lakhs) Rev(in lakhs) Growth Phone Growth
Cr) Yoy Growth
FY10 13.8 307 0 0 0% 0% 0%
FY11 34.46 713 0 0 132% 132% 0%
FY12 27.58 539 0.03 2.05 -24% -24% 0%
FY13 55.47 772 1.83 76.02 57% 43% 3608%
FY14 105.56 1283 13.1 574.02 119% 66% 655%
FY15 155.57 1669 37.77 1631 78% 30% 184%
FY16 177.06 1767 54.96 2277.9 23% 6% 40%
Problem Statements

Has product rationalization worked ?

The clear answer is No as Market share has reduced consistently. However, it has worked in
some case as now they are able to focus on limited number of models. Company did grew
from previous year but the market share has reduced. After rationalization it is clearly visible
from Table A,B (highlighted in yellow), Lava still has a lot of room for improvement as 95% of
the market is eaten by competitor which can be explored by being proactive in releasing new
models. From the case it has been identified that competitors are introducing better and
newer products which is eating up Lava’s share. Otherwise the both Smart phone and Feature
segment has tremendous potential. Here one reason may be because Lava is dealing with 14
different vendors, they are slow in releasing newer models. They have to change their
operating model and reduce the number of vendors to maximum 4 to get benefit from the
market and to have an edge in terms of releasing newer products.

Which Market Segment are better ?

Here, obviously Smart phone market segment is better than feature phone as Revenue in the
If I amSmart phone market is high. Secondly the market is growing with tremendous speed
with the introduction of Jio and data cost getting lower each day. Lava should definitely focus
more on Smart phone segment as that is the future. However, that doesn’t mean they should
give less focus on feature phone segment. Their first priority should be releasing newer
models and stopping old models as mentioned in Problem Statement 1. It is clearly visible
from Table A,B (highlighted in green) that newer releases are doing better. Lava should focus
more on Selfie Camera and Dual Sim phones which are currently in demand in the market.
So, their business strategy should be based on the same.

Revisit Marketing and Branding ?

And the answer is strong Yes as their competitors are doing the same. Lava until now has
been promoted as Low cost brand which must be changed to attract more segment of people.
Lava is only available in less than 10,000 segment which must be changed to eat market share
of competitors. Lava must move into Medium and High Cost segments which will resolve one
of the challenge highlighted in the case study (On par with competitor in terms of quality but
still seen as low quality brand). From Table C (highlighted in blue), it is clearly visible that Lava
is growing but not at a speed of competitors. Lava may not have advantage of deep pockets
but it definitely has an advantage of being an Indian brand and having manufacturing units
within India which must help to keep logistical cost low. Lava must promote Made in India
brand to ease up competition as currently Most market share is of Chinese phone. Table C
also shows that Lava’s growth in Smart Phone segment is more and so they should focus their
Marketing and Branding on that segment. Secondly, Lava is focusing on 50 product which
must be stopped. They should only keep max 6-8 products in the market as dealers are happy
to keep such numbers in stock. It will also allow dealers to keep the complete brand. If they
have to shortlist from 50 products, a lot of time is wasted in research and they may miss an
opportunity to keep the correct models in stocks. This may lead them to keep competitors
product.
Additional Changes Required

Lava should also start partnering with Online websites like Amazon and Flipkart who are the
main sellers of Chinese smart phone. This way they will reduce the logistics cost considerably
and they will reach the Med and High Cost phone Market segment who usually purchase
everything online. Lava currently doesn’t have a good online sales presence. Lava must also
focus on releasing exclusive models only available with a single partner which is the current
trend.

Secondly, Lava should take advantage of being Indian. Chinese companies inspite of not
Indian have stores in every region of India which is not the case with Lava. Lava must increase
its distributor and retailer base which will help them sale products in every region.