Apple seeds India for future iPhone growth

Will the iPhone 12 take off in India?

As Apple prepares to launch its biggest and smallest flagship iPhone, India has emerged as a critical market for the tech giant according to an Asia Pacific retail expert from Griffith Business School.

Dr Charles Jebarajakirthy

Dr Charles Jebarajakirthysays several factors are working in Apple’s favour after years of trying to establish a foothold in the world’s second largest smartphone market.

“Chinese brands are the dominant vendors for smartphones, but the growing anti-China sentiment from border disputes between the two countries has seen the South Korean manufacturer Samsung expand its market share and this benefits Apple.”

But he says one of the biggest hurdles for the iPhone 12 is the price, which carries a hefty import tax as it is not made locally. The average selling price for smartphones in India, according to marketing intelligence firm IDC, is $172 US.

“With the exchange rate it is actually cheaper to purchase an iPhone 12 Pro in Dubai than in India. But since Apple opened its online store, it can offer trade-in discounts and monthly instalment payments.”

“My own research in the Indian market shows that when retailers offer easy instalment plans, it increases the demand for luxury items like Apple’s products.”

“This will help them attract new customers, but they should target the value-conscious consumers too.”

iPhone: Made and Sold in India

‘Namaste’ after 20 years of operation in India, Apple opened their first direct to consumer online store.

Dr Jebarajakirthy said Apple’s online store launch shows they’ve avoided many mistakes multinational companies make when setting up retail channels in India.

“Brands need to culturalise or be influenced by the country they set up in and adapt to expectations, income patterns and culture. Apple’s strategy of opening in September shows they’ve done their research.

“October to November is the festival period and they’re the peak spending months for Indian consumers celebrating Diwali. Apple even bundled free AirPods with the purchase of a new iPhone 11 from their store and it reportedly sold out in hours.”

He also said Apple offered their customer service in different regional languages beyond Hindi and English, making it accessible to different consumers.

Apple has also made moves to start manufacturing locally and earlier this year started building one of its premium models the iPhone 11 near Chennai. Dr Jebarajakirthy said this should help drive down costs but that Indian consumers also look favourably on local manufacturing.

“Multinationals that manufacture in India are seen to be co-contributing to the development of the economy.”

“Apple could adopt a similar strategy used by Unilever and Nestle, hiring and working with local people and selling the products to the same customers.”

One of the advantages that Apple has over other smartphone manufacturers is its growing services portfolio which includes Apple Music and Apple TV+ which is far cheaper in India than Australia.

“If Apple’s services could incorporate Indian music, movies and television this could really benefit their hardware business. Bollywood and India’s overall media and entertainment industry are one of the biggest and this could give them a huge advantage in the market.”

Designing culturally relevant retail spaces

Apple’s most ambitious retail project sits on the waters of Marina Bay in Singapore.

While Apple has not revealed plans for an official retail store in India yet, Dr Jebarajakirthy said Apple can wait out the COVID-19 pandemic to avoid unnecessary overheads.

“Many companies are rethinking buying physical retail spaces and cutting back. If it were a normal time period, then Apple should be designing a store that incorporates Indian symbolic values from the entrance to the interior and layout.”

“But this might also be an opportunity for Apple to investigate different distribution networks like Unilever which recruits women and gives them a cut of the profit for selling items in rural villages.”

Dr Charles Jebarajakirthy is the co-author of Impact of acculturation to western culture (AWC) on western fashion luxury consumption among Gen-Y consumers in the Asia-Pacific Region published in the Journal of Retailing and Consumer Services.