After selling off his telecom business to Idea and speculations rife on the sale of his mobile business to Sony Ericsson, B. K. Modi is still betting big on mobile retail. surbhi chawla analyses what makes this business worth keeping for the Modi camp?
“This is a very lucrative category, and Hot Spot is best in most of the things. For instance we are very strong on the product mix side,” avers Sanjeev Mahajan, CEO, Hot Spot. Hot Spot also has a healthy product range with mobile phones in all ranges from Rs.1,000-50,000. Not only this, Hot Spot has an edge in the mobile accessory market, with margins of over 50% in the category. Here Hot Spot has taken the lead by launching its own private label in Bluetooth devices, batteries, chargers, memory cards & fashion accessories. Given the fact that the accessories market is growing phenomenally and the margins too are kind, the move has been spot on. Little wonder, that although it has only been six months since Hot Spot has entered this domain, 20% of their accessory sales have now started to come from their own private label.
Another ace for Hot Spot is its service proposition. States Mahajan, “There is a huge gap in the service side of this market and we believe that the key to this market lies in developing the service network.” Currently, Hot Spot has close to 100 service centres and around 250 franchisees for services. But the edge is being lost as The Mobile Store is also offering a similar service model. With the shelf life of a mobile handset dropping to under a year and the replacement market growing at a phenomenal pace, developing an on-going relationship with a customer could prove to be crucial in the times to come. The Future Group promoted mbazaar, too has similar plans. “We would be looking at adding more value adds to the customers like offering them insurance, after sales services, et al,” states Rahul Rajamudhiah, COO, CorvergeM, Mobile & IT-related division of Big Bazaar. One cannot, however, deny the fact that the competition in the sphere of mobile retail is gaining momentum by the day and although Hot Spot was the first one to enter this category, the likes of The Mobile Store and Subhiksha Mobile are way ahead in the total tally of stores and it would have to speed up its pace to be present in strategic locations to have an edge over them.
Hot Spot also needs to up its marketing activities as players like Subhiksha Mobile & The Mobile Store are very aggressive on the marketing & advertising front. Also the fact that Hot Spot that talks about being brand neutral is actually perceived by many as being a Nokia Priority dealer (as it pushes Nokia more aggressively than other brands), might just come in the way of its neutrality positioning. In particular, Hot Spot now needs to aggressively brand itself in the mobile retail market, or it will lose out on the edge that it has managed to create for itself in mobile retail, just as they lost the first mover advantage in the mobile handsets business.
“This is a very lucrative category, and Hot Spot is best in most of the things. For instance we are very strong on the product mix side,” avers Sanjeev Mahajan, CEO, Hot Spot. Hot Spot also has a healthy product range with mobile phones in all ranges from Rs.1,000-50,000. Not only this, Hot Spot has an edge in the mobile accessory market, with margins of over 50% in the category. Here Hot Spot has taken the lead by launching its own private label in Bluetooth devices, batteries, chargers, memory cards & fashion accessories. Given the fact that the accessories market is growing phenomenally and the margins too are kind, the move has been spot on. Little wonder, that although it has only been six months since Hot Spot has entered this domain, 20% of their accessory sales have now started to come from their own private label.
Another ace for Hot Spot is its service proposition. States Mahajan, “There is a huge gap in the service side of this market and we believe that the key to this market lies in developing the service network.” Currently, Hot Spot has close to 100 service centres and around 250 franchisees for services. But the edge is being lost as The Mobile Store is also offering a similar service model. With the shelf life of a mobile handset dropping to under a year and the replacement market growing at a phenomenal pace, developing an on-going relationship with a customer could prove to be crucial in the times to come. The Future Group promoted mbazaar, too has similar plans. “We would be looking at adding more value adds to the customers like offering them insurance, after sales services, et al,” states Rahul Rajamudhiah, COO, CorvergeM, Mobile & IT-related division of Big Bazaar. One cannot, however, deny the fact that the competition in the sphere of mobile retail is gaining momentum by the day and although Hot Spot was the first one to enter this category, the likes of The Mobile Store and Subhiksha Mobile are way ahead in the total tally of stores and it would have to speed up its pace to be present in strategic locations to have an edge over them.
Hot Spot also needs to up its marketing activities as players like Subhiksha Mobile & The Mobile Store are very aggressive on the marketing & advertising front. Also the fact that Hot Spot that talks about being brand neutral is actually perceived by many as being a Nokia Priority dealer (as it pushes Nokia more aggressively than other brands), might just come in the way of its neutrality positioning. In particular, Hot Spot now needs to aggressively brand itself in the mobile retail market, or it will lose out on the edge that it has managed to create for itself in mobile retail, just as they lost the first mover advantage in the mobile handsets business.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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