In its effort to ensure that iPhones become the smartphone of choice in Indian markets, Apple is covering virtually all the bases that constitute an effective retailing strategy.

To start, it is finding the appropriate places to distribute its products. India long maintained strict regulations on foreign entrants, which have loosened only relatively recently. Therefore, Apple works with Indian distributors that already have relationships in place with local retailers to get iPhones in people’s hands. At the same time, it has applied to take advantage of shifting regulations to open its own stores, as well as selling products online to consumers in India. With these efforts, Apple has gained a foothold in most major metropolitan areas. Now it is turning its attention to the harder-to-reach rural centers and seeking creative distribution and retailing tactics in those areas.

To ensure that customers are aware of the availability of iPhones, Apple similarly is launching multi-pronged promotional campaigns. It makes sure that new versions are available soon after their launch, so that it can build on the global buzz that tends to surround new releases. But it also relies strongly on billboard advertising in major cities, and the company has long-running advertising campaigns in newspapers, where its products feature prominently in attractive, full-page ads.

Much of the advertising seeks to promote a new perspective on Apple’s pricing, which thus far has seemed out of reach for many Indian consumers. Average incomes in India are equivalent to about $1500, and even middle-class consumers earn about $8000 per year. Thus iPhones, priced between $500 and $1000, have gained a reputation as a high-end luxury, out of reach for most people. To address the challenge, Apple highlights the benefits of iPhones, suggesting their value for the money. It started offering low-interest financing options as well, in collaboration with local banks, to help people spread the payments for their phones over time. In the meantime, the price points have come down somewhat, and Apple promises rebates to customers who trade in an older model for a new iPhone.

These trade-ins also reflect Apple’s efforts to expand the size of the smartphone market overall. Many Indian consumers rely on mobile devices without smart capabilities, such that only 35 percent of the mobile phones sold in India are smartphones. Noting the conventional wisdom that suggests this rate is set to increase—one consulting company anticipates that India will surpass the United States as the second largest smartphone market, behind only China, by 2017—Apple hopes to greatly increase its own share. Currently, only about 2 percent of Indian consumers have an iPhone, but even that tiny share accounts for about $1 billion in revenue for Apple. If the projections hold true, India promises remarkable potential growth for Apple, at exactly the moment its sales growth in existing country markets like the United States and China has started to stagnate.

Discussion Questions:

1. Why is Apple strengthening its presence in India?
2. What is Apple doing to appeal better to the Indian market?

 Source: Newley Purnell, The Wall Street Journal, January 20, 2016