The launch of Apple’s new iPhone SE has come with talk about expanding in the emerging market of India.
Middle class rising
India’s population changes will make it an attractive market segment for Apple over the next decade due to the rise of a new middle class.
Between 2015-2030, median household income is predicted to increase by 89.8% in real terms.
By 2030, middle class households will exceed 90 million, making it the second largest middle class market in the world.
New money, new values
The growth of India’s middle class will lead to rises in the discretionary spending power of households. This will change the psyche of this market segment.
Demand for quality consumer products will rise as more customers seek to fulfil product needs further up the hierarchy.
The smartphone market now is dominated by cheaper mobile devices. As this market segment grows, they will likely seek out more aspirational products such as the iPhone.
It’s the right place and right time
India’s smartphone market is set to grow substantially in the next few years.
Analysts are predicting there will be another 117 million smartphone units sold in 2017.
It is also estimated by the end of next year, India will surpass the US as the second largest market for smartphones globally.
Another significant piece of data pointing to opportunity is that only 40% of mobile devices in India are smartphones.
Apple has only around 1.8% of market share in India. However, the market is growing and is nowhere near being mature or saturated.
Battling elitist perceptions
Apple has repositioned its offering in the marketplace. It has made changes to its pricing, distribution and promotional activities in India.
Apple iPhones are positioned at the higher end of both quality and price in the market place. This is sensible in developed markets. However, if Apple wants to make progress in emerging markets such as India it will have to follow a different strategy.
Cheaper, but not cheap
The Apple iPhone SE is positioned on price at around the $450 range. It is the first time Apple has priced a phone in that segment.
The SE is positioned above the entry-level smartphones on sale in India. It is not, however too premium priced to be beyond the range of aspiring households.
Apple has not compromised on the quality of the product. The SE continues to carry most of the high end specs of the iPhone 6.
This approach has repositioned Apple in India: iPhones are not simply for well off Indians, but are an option for middle income households.
Apple has wisely chosen not to compete at a congested cheaper range with its main competitors. It has maintained its point of difference as a high end but now affordable device.
iPhones for the masses
Apple is widening its distribution networks across India.
It has applied to Government to open its own stores and sell online.
It is also increasing distribution outside of India’s main cities to rural areas where approximately 70% of people live. It will do this through smaller distributors to bring the product direct to rural customers.
Apple has also been working with banks to help Indians get finance to buy phones.
Battling for the hearts and minds
Apple has increased it’s advertising spend to convince customers its iPhone is within reach.
It has chosen a multi-channel strategy, investing heavily in outdoor (billboards) and full page press ads across India.
The data doesn’t lie: India is great opportunity for Apple.