A New Strategy for India?

During the most recent management meeting at Nokia's Asian headquarters, a small company called Micromax was discussed. This firm is one of the fastest-growing cell phone companies in India. The company started as a pay phone provider but quickly branched into mobile phones. In just a few short years, Micromax sold 1 million handsets per year, grabbing 4 percent of the Indian market. Much of this growth is coming at Nokia's expense, which has seen its market share in India dip from 64 percent to 52 percent.

One of the keys to Micromax's success is its strategy of creating phones that cater specifically to the Indian market. Its first phone, which featured a small screen and a huge battery and could run for five days, was inspired when Micromax executives saw a long line of people waiting to use a man's car battery to charge their cell phones. A popular current model is inspired by Bollywood films and features ornate costume jewelry. One of the reasons Micromax is so popular is most of its handsets allow consumers to access multiple accounts, either by hosting two phone numbers or allowing for easy switching of SIM cards (small cards identifying a particular user on the network). Because these phones are targeted toward a market where Internet and 3G coverage is still sporadic, most of Micromax's phones lack Wi-Fi, 3G, or GPS, features critical to a phone's success in the United States or Europe.

All of this is counter to Nokia's strategy, which has been to make phones for a worldwide market. This means it sells what is basically the same phone in Midland, Texas, as in Mumbai, and emphasizes the quality of its products. In fact, each phone spends 18 months in development and is tested for quality and durability.

As the market share in the rapidly growing Indian market continues to spiral downward, some in the company wonder if a change in strategy is needed. Instead of offering high-priced, high-tech phones that are similar to what it sells in the rest of the world, the executive team is contemplating whether the company shouldn't try to duplicate what Micromax is doing and sell phones more suited to Indian consumer tastes.

1. What do you think would be a more effective strategy for Nokia to respond to Micromaxdifferentiate itself from Micromax or replicate what it is doing? Why?

2. How could a shadow-strategy task force help Nokia identify the best way to proceed?

3. What positioning strategy should Nokia use to gain an advantage against Micromax and other competitors?