Yu Yureka: A Killer Strategy by Micromax & Amazon

Indian smartphone market is very lucrative for many companies. Every week new budget smartphones loaded with great software and hardware features are hitting the market. With high disposable income, tech savvy young Indians are the new era Innovators (the customer segment- tries, explores new product in the market) for the technology companies. After the success of Chinese brands like Xiaomi, 1 plus 1, another new brand- Yu Yureka hit the Indian market on 12^th January 2015. It became a huge success and the table below depicts that. 

Yu Yureka is marketed by Micromax and exclusively available on Amazon on subscription. The Yu Yureka phablet has 5.5 inches of big display loaded with robust hardware and runs on CyanogenMod Android 4.4.4 (KitKat). CyanogenMod is an open source operating system for the smartphone and tablet, developed on Android base. Without going to any further specification of Yu Yureka, we will straight away discuss the marketing strategy adopted by Micromax and Amazon to compete with other brands.

                      1) Penetration Pricing   2) Flash sale

PENETRATION PRICING:

If we think about launching new product or service- two broad pricing strategy comes into mind 1) price skimming & 2) penetration pricing. The basic difference between these two strategies are the initial price. In case of Price skimming- the initial price is set high and the major chunk of revenue comes from the innovators and early adopters segments and gradually the price decreases. Whereas launch price is set low in case of penetration pricing strategy (introduction phase of Product Life Cycle) and in the growth phase the price is increased to a certain level. And the company earns more revenue and captures market share by selling more number of units during the introduction phase.

Penetration pricing help companies from two different fronts and they are:

1)      Customer Front:

a.       It helps to grow the customer base and revenue

b.      It lures the customers from high-price competitors

2)      Supplier Front:

a.       Higher volume sales lead to higher production and it could lead towards economy of scale

b.      And by bulk purchase from suppliers, company could avail discount

Yu Yureka is now available for INR 8,999, the launch price but the actual price is INR 12,4999. The competition in the budget smartphone is fierce and the major players are Moto E 2^nd generation (INR 6,999), Asus Zenfone 5-8GB variant (INR 7,999), Lenovo A6000 (INR 6,999), Redmi 2 (INR 6,999), Redmi Note 4G (INR 9,999) etc. Being a Chinese brand, Yu is providing products at a very competitive price and catering to the price sensitive Indian customers properly.

FLASH SALES:

Flash sale, popularly known as daily deals is a strategy used by retailer to 1) build brand loyalty and also to 2) liquidate the surplus inventory. It has been used by fashion retailers. In this type of sales for a limited period products and services are available at a very low price so it lures the customers and no doubt, it generates the excitement among the retailer buyers. Providing daily deals, deals for a limited period are growing trend in e-retailing. In India, Flipkart has tried this flash sales strategy for electronics products like Moto G, Moto G 2^nd generation, Moto E and the response was very good from the Indian customers. The Big Billion-Day sales of Flipkart on 6^th October 2014 is an example of flash sales.

Amazon used this strategy to launch Yu Yureka so that the excitement level among the customers remains high.

  

Looking into the demand of Yu Yureka we can say that, the strategy has worked for them. But the big question is whether the demand will remain same after the end of the flash sales?