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New Delhi and Mumbai: Smartphone brands have ramped up marketing and advertising spends by at least 15-20% in an aggressive push to capitalise on the upcoming festive season and salvage a disappointing year. Majority of the investments will go towards offering price discounts in an aggressive bid to clear stocks and tap the fast-growing mid-to-premium segment, said industry executives and analysts.
Companies are earmarking most of the spending on new model launches and to offer discounts, among others. Some are also spending on incentivising offline retailers for achieving steep sales targets, with companies offering cashbacks, free mobile phones and even all-expenses paid trips to Europe.
The higher promotional spends come amid analysts’ forecasts of a muted festive season this year with brands expected to clock single-digit on-year growth in sales volumes. Counterpoint Research expects handset sales to grow 4-5% on-year to 30-35 million units during the one-month festival period starting later this week.
“Marketing and ad spends by smartphone brands in the upcoming festive quarter are expected to be at least 15-20% higher, compared to last festive quarter,” said Navin Khemka, chief executive, South Asia, of media buying and planning giant GroupM-owned agency EssenceMediacom. The company represents Vivo, Dell and Airtel, among other brands.
“Marketing spends in the smartphones category are very launch-led. Creating buzz in the category is crucial,” Khemka said.
Industry executives, however, believe a large share of companies’ marketing budgets this year will be geared towards offering steep discounts to customers during the festive period, especially by those who are sitting on large inventories.
“Usually during Diwali, most brands sort of push up their marketing spends and increase their promotions. I don’t see too much of that happening for the mobile phone brands this time. They would be limiting their spends on promotions and channel the money towards providing more discounts and push up sales,” said Madhav Sheth, chief executive at HTech, which owns the brand license to sell Honor-branded handsets in India.
HTech plans to launch six to eight Honor smartphones by this year-end, adding to the four models it has on sale currently. Sheth said however that the company’s product launch plan is modest compared to rivals who are seeking to align stocks with lower demand this year.
To capture the consumer frenzy, smartphone brands like Xiaomi, Samsung, Realme and others have announced dedicated sales campaigns for the festive season, highlighting key deals for products across price segments. Market leader Xiaomi has announced deals worth over Rs 1,000 crore for customers. The company is also offering a comparatively higher 7-11% dealer margin on its premium range in an effort to grow its negligible market share in the premium segment.
Brands like Samsung and Realme are targeting preferred retailers to drive sales. The Korean major announced steep price cuts on its current generation of flagship smartphones and tied up with high-value retailers promising all-expenses paid trips to luxury destinations like Paris, Canada and Malta upon achieving 35% higher sales over July and August.
Beverage maker Coca-Cola is running new ads for its Sprite soft drink which link directly with smartphones – where consumers can scan codes on the beverage brand packs and win up to Rs 25,000 cashbacks.
An executive at a marketing agency said there is an escalation of such partnerships between brands and smartphones, given growing smartphone penetration specially in tier II and III markets.
Logistics company Delhivery, in a September 16 report, observed there has been a surge in mobile phone and power bank sales, with electronics gradually replacing dry fruits as the favoured gift during festivals, whether for individuals or corporate gifting.
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