Why price sensitivity is so important in the age of Digital India?

Considering the demographics of mobile evolution, price sensitivity is the defining factor of Indian mobile market

Year 2005 witnessed the early advent of Micromax in the Indian market – disrupting the status quo formed by Nokia, Blackberry and Samsung. Founded by Rahul Sharma, Rajesh Agarwal, Vikas Jain, and Sumeet Kumar, Micromax, a local mobile phone manufacturer, managed to grab a fair market percentage in spite of the presence of established players – changing the scope of Indian mobile industry.

How? Micromax, as an Indian mobile firm capitalized on the growing demand of smartphones in the country and instead of offering flashy phones to the urban sector, the company targeted a balanced share of urban and rural population by introducing affordable handsets. The market’s success didn’t just point towards the scope of opportunities in the mobile sector, but further highlighted the importance of price sensitivity in the Indian mobile market.

What works – Premium vs budget

Indian mobile phone market is driven by a cost-value balance that primarily divides it in premium and budget sections. In a market where all it takes is a couple of new features to introduce a new smartphone, a successful product is determined by its target audience and their preferences.

For instance, a smartphone with high quality hardware and latest features, priced at Rs 40,000 is not going to cater to either of the aforementioned customer divisions. On the other hand, a good quality smartphone having just above minimum features, available at half price has better chances of reaching out to the masses.

In a price sensitive Indian market, ‘what works?’ is essentially defined by the product’s alignment with the ongoing bracket of ‘affordability’ in the market. And though this sounds easy, achieving it in the age of Digital India is quite a challenge due to the dynamic customer demands and high market competition.

Digital India and the directions for mobile manufacturers

Similar to the direction of Micromax in 2005, the current Indian market scenario featuring an increased number of local companies is strongly inspired by government initiatives such as Digital India. Aimed at the indigenous development of the country, local mobile manufacturers, mobile data providers, and associated industry leaders are leading the market as they follow the pitch of a balance between quality and price. This can be attributed to the recent developments in the country featuring easy access to 4G data at affordable rates and e-commerce expansion.

Combine this with the efforts towards improving the rural customer base with budget smartphones and there is a blurry vision of a framework that is not only going to fuel the injection of technology in the hinterlands of the country, but further play a crucial role in achieving the primary objective of tech democratization and country’s digitalization.