Sourcing affordable technology

LAVA International Ltd. is one of the leading Indian Mobile companies which started its expedition way back in 2009. LAVA today has embarked its footprints everywhere. Talking about the journey covered by the brand, Mr. SN Rai, Co-Founder & Director, LAVA International Ltd, illustrates the functioning of the brand.

Aadeetya Sriram (AS): Tell us about your journey over these years?

SN Rai (SR):  Lava Mobile Ltd. is primarily concerned with selling handsets in the country. We started with a vision of empowerment, and the reasons for us entering into this segment, is the obvious tele-density upward trend, which has empowered the people, resulting in economic progress. We started with the handsets, and since our inception 18 months back, our journey till date has been quite satisfactory, and we plan to further expand our product base in the near future.

AS: How has the brand been developed? What sort of investment are we looking at?

SR: We hadn’t invested much, when we started with our business and we have been investing mainly on the value of business that basically comprises of R&D Post-Sales Experience, Awareness & Retail Distribution. Initially these were priorities; we will continue to invest in them ahead as well. We will be investing around 6% of our revenue, which is around Rs.130-140cr. Till date we have invested Rs.60cr as part of our strategy to develop the brand. In terms of Post-Sales, we are mainly investing on the technology side, CRM and creating enterprise-grade I.T connectivity, and we plan to create a large service network based on our reach. Also 5% of our revenue is invested as a part of our awareness and promotion strategy.  

AS: Could you elaborate on the kind of R&D setup for Lava International?

SR: We concentrate on the R&D mainly because, of our belief to enhance our brand position. We have not existed in this segment for the mass, our brand was never positioned as something for all rather we would like it be lot for a few. That has been a strategy that we have emphasised on quite extensively. To undertake such a deep consumer insight centric model, it requires Core-Differentiation on the product and technology level. This is where the utilization of R&D has been imperative for us. In order to fulfill the requirements and needs of the consumers we had to establish our design-value chain for the company.

AS: What market share have you attained?

SR: Currently, we have 4% of the market share in the segment. Frankly, we are not chasing any targets at the moment, the only real reasons for our growth has been connection with our consumers. We have just initiated with our journey into the segment and we hope to be present for a long time. We believe that within next 4-5 years, when the market consolidation will take place that will be the right time to assess our market standing. This is the time for us to invest on the input side of the business as we understand the potential of the market, and we hope to be a part of this development.

AS: Are you manufacturing the handsets as well?

SR: We are not manufacturing the handsets at the moment. Manufacturing is a very small value-add for our business. We heavily focus on the design side of the business. First, we would like to stabilize our core-capabilities, on the design front, similar to how big brands like Apple have established themselves. Manufacturing and Designing never go hand-in-hand in terms of core responsibilities for a brand, currently if we undertake manufacturing as well; perhaps we will languish in a no man’s land with our development as a brand. Even then we will be investing on the distribution-end for the sake of our brand philosophy.

AS: Considering the pricing of your handsets, which no doubt is attractive, what sort of technology have you implemented for them?

SR: On the chip-set side, it is normally available as reference design. Nowadays technology is no more a barrier in the current trend. It is accessible to everybody. If you are willing to spend bucks, then you can avail those services, but the largest challenge is on the execution side. Since we attain a substantial deep knowledge on the development side of the business, on distribution side of business, we feel that we have been able to create a constructive approach offering to our consumer. Assessing the needs of the consumer in terms of technology, we have been able to utilise our skill set of design and technology to deliver their needs. We are working on the application level of the software as well as the core OS level of the software, and also the middle-ware structure.

AS: Gradually, there is a visible upgradation in terms of your marketing strategy? What are the factors leading to them?

SR:  As a strategy, we have implemented the unconventional down-to-up approach rather than the conventional one. Initially, we explored the lower rung of the pyramid, to make our presence felt, and those consumers are value-seeking consumers, their perception of the brand is distinguished. India as a market is well aware; people here are logical and creative. Our idea is to create a brand, without compromising on the quality and requirements. Now we are available in urban market, so the gradual change in terms of our strategy for marketing has been visible. On the promotion side of business, we are allotting equitable ATL & BTL spending. For the next fiscal year, we have decent elevation for our ATL also. We feel that promotion still plays 20% for the brand.

AS: What sort of retail distribution pattern do you follow?

SR: We have exclusive distribution set up for Lava; for retail we have our offerings available at various MBO’s, but our differentiation lies in retail level where with the kind of support we provide, we empower them to gain knowledge in terms of post-sales experience. In terms of our own exclusive outlets we are checking some feasibility and will assess the possibilities as it comes forth.

AS: Where do you have your strongest presence in the country?

SR: We are strongly present in the north, in some parts in south like, Karnataka, we are reasonably strong in the west as well, at the moment east has not yet responded to our expectations.

AS: What are you plans for the future?

SR: We do not plan far-fetched things, but for the short term as we believe whatever skill-sets we have developed and experienced in the Indian market, we would like to take them international. Even this will be a brand-experience strategy not as a trade strategy. We will launch ourselves gradually in the global market in the near future.