Why Companies Are Facing Tough Competition In Mid-range Price Segment
The mid-range segment is currently cramped, with multiple brands competing with each other. Here are a few reasons why smartphone OEMs are facing such intense competition.
There are two key segments that dictate how well a smartphone brand does in India. These two are the budget segment and the mid-range segment. While brands like Apple and OnePlus do not place an emphasis on providing budget or mid-range phones, other brands like Xiaomi, OPPO, Vivo, and Samsung have been throwing everything but the kitchen sink, with the intention of providing feature-rich phones in both the segments.
Apple and OnePlus have always focused on the mid-premium and premium segments. While it is largely still a two-horse race in the premium segment between Apple and Samsung, it is the opposite in the budget and mid-range segments. The mid-range segment in particular provides numerous challenges and poses a lot of problems to the brands. For instance, while consumers do not expect high-end features or specs from the mid-range phones, they still want more bang for their buck as compared to the budget segment.
So how do you strike the right balance between functionality and price? What else can you change or add to the mid-range smartphones to make them more attractive? We take a look at a couple of reasons why the brands in the mid-range segment are facing tough competition.
One of the crucial ways in which smartphone brands try to position themselves as the go-to brand for consumers is by offering their smartphones at lower costs than their competitors. For instance, when we talk about mobile phones under 25000, you can find two brands offering smartphone models with almost the same features, but at different prices. Even if the difference between the costs is minimal (let’s say ~Rs. 1,000), consumers would rather spend Rs. 1,000 less on a new smartphone model, than pay an additional amount for a phone with the same features from a different brand.
OEMs do extensive research and consumer surveys before launching a new device, and they do this to understand what price works best for them, and how they can out-do the competition. This method is executed across the board, which only intensifies the competition.
It is common knowledge that today, brands try to pack as many features as possible in a smartphone while ensuring that there is still a significant difference between manufacturing costs and market price. The economies of scale also ensure that the smartphone brands make huge profits, which bodes well for their bottom line. Thus, they try to provide as many features as possible in mid-range smartphones, which forces the competition to do the same.
For instance, when people initially talked about 5G smartphones, they believed a 5G-enabled handset would be too expensive. However, today, we get a 5G smartphone for less than Rs. 25,000, with an excellent example being OnePlus Nord. That said, other brands are now working on 5G smartphones that are cheaper and provide the best phones under 25,000 INR. Realme and Xiaomi are expected to unveil new 5G smartphones that will cost just around Rs. 15,000! That alone tells us how smartphone brands are trying their hardest to reduce prices as much as possible while packing all the latest features.
Last but not least, there is intense competition in the mid-range segment, as the winner of the budget and mid-range segments will arguably dominate the smartphone market in the country. Xiaomi has been the runaway leader over the last two years, while Samsung and OPPO are now trying to close the gap between them and Xiaomi. The chasing pack also includes Vivo and Realme, which highlights the significance of capturing a greater share of the mid-range segment for all of these brands.