In Short:
Smartphone brands in India are boosting marketing budgets by 15-20% ahead of the festive season, aiming to clear stocks and attract mid-to-premium buyers. Companies plan major discounts and new launches, with initiatives to incentivize retailers. Despite expectations of only modest sales growth, brands like Xiaomi and Samsung are launching campaigns and offering cashbacks to entice consumers and drive demand.
New Delhi and Mumbai: Smartphone manufacturers have significantly increased their marketing and advertising budgets by at least 15-20% in an assertive effort to leverage the upcoming festive season and recover from a lackluster year. A substantial portion of these investments will be directed towards price discounts, aiming to clear excess inventory while appealing to the rapidly expanding mid-to-premium market segment, as indicated by industry executives and analysts.
Strategic Spending Focus
Firms are allocating most of their budgets on new model launches and discount offerings, among other initiatives. Furthermore, some companies are incentivizing offline retailers to meet ambitious sales targets by providing cashbacks, complimentary mobile devices, and even fully funded trips to Europe.
Muted Sales Projections
The increase in promotional spending comes amid predictions from analysts of a subdued festive season this year, with brands anticipated to register single-digit year-on-year growth in sales volumes. According to Counterpoint Research, handset sales are expected to grow by 4-5% year-on-year, reaching 30-35 million units during the one-month festival period commencing later this week.
“Marketing and advertising expenditures by smartphone brands in the upcoming festive quarter are projected to be at least 15-20% higher compared to last year’s festive quarter,” stated Navin Khemka, Chief Executive for South Asia at EssenceMediacom, a media buying and planning agency under GroupM. This agency represents brands such as Vivo, Dell, and Airtel.
Launch-Focused Marketing Strategies
Khemka noted that the marketing spending in the smartphone sector is largely driven by product launches, making it essential to generate excitement within the category. However, industry executives suggest that a significant portion of this year’s marketing budgets will focus on substantial customer discounts during the festive season, particularly among those companies with considerable inventory.
“Typically during Diwali, most brands tend to bolster their marketing expenditures and amplify promotions. However, I don’t foresee much of that occurring for mobile phone brands this time around. They are likely to restrict spending on promotions and redirect funds toward providing increased discounts to drive sales,” mentioned Madhav Sheth, Chief Executive of HTech, which holds the brand license for selling Honor smartphones in India.
HTech is planning to launch six to eight new Honor smartphones by the end of this year, in addition to the four models currently available. Sheth added that the company’s product launch strategy is relatively modest compared to competitors that are trying to align their stocks with the diminishing demand this year.
Dedicated Sales Campaigns
To attract consumer interest, smartphone brands such as Xiaomi, Samsung, and Realme have announced targeted sales campaigns for the festive season, showcasing significant deals across various price segments. Market leader Xiaomi has introduced promotions worth over Rs 1,000 crore for its customers. Additionally, the company is offering a comparatively higher dealer margin of 7-11% on its premium range to enhance its presence in that market segment.
Brands like Samsung and Realme are emphasizing partnerships with preferred retailers to boost sales. The South Korean giant has implemented substantial price reductions on its latest flagship smartphones and has collaborated with high-end retailers, promising all-expenses-paid trips to luxury destinations such as Paris, Canada, and Malta for achieving a 35% increase in sales over the months of July and August.
Innovative Marketing Partnerships
Beverage manufacturer Coca-Cola is launching new advertisements for its Sprite soft drink that directly connect with smartphones, allowing consumers to scan codes on beverage packaging for a chance to win cashback up to Rs 25,000.
An executive at a marketing firm noted a rise in collaborations between consumer brands and smartphone companies, particularly given the increased smartphone penetration in tier II and III markets.
Shifting Gift Preferences
In a report published on September 16, logistics company Delhivery observed a notable increase in mobile phone and power bank sales, indicating a shift in gifting trends as electronics become the preferred gifts during festivals, overtaking traditional choices like dry fruits.
