Business Case Study: The Marketing Strategy which turned Boat into a 1500CR Company
Here is the business case study explaining the Marketing Strategies which turned Boat into a 1500 CR Company.
Boat is one of the most incredible brands in the Indian startup ecosystem and the most astonishing thing about this company is that within just five years they have achieved such a strong position in the market that if you look at the True Wireless Stereo (TWS) market as of Q3 of 2021 while Boult stands at 5.3%, Noise stands at 7.7%, Realme stands at 8.1%, Boat stands way ahead with a market share of 35.8% which is literally more than the next three competitors combined.
On top of that, the revenue of the company has already crossed Rs.1500 Crores in FY-2021 and the profits have already shot up by 61% since FY-2020.
Now considering the fact that Boat is now going for an IPO, the question is,
How did Boat achieve such an extraordinary position in the crowded hearable market of India,
What exactly was their business strategy, and
What are the business lessons that we need to learn from Mr.Aman Gupta (CoFounder) and his wonderful team at Boat.
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One of the most important reasons for Boat’s success is its genius Market Positioning and if you look at the rise of Boat it is very very similar to the rise of OnePlus phones in India.
Many of you must have seen that there was a time when the OnePlus brand was just one of the most functional underrated brands in India and it was only popular among tech enthusiasts but suddenly with the launch of OnePlus 7, the OnePlus tag became one of the most popular brands in India and you could literally see OnePlus 7 phones everywhere in 2019.
In fact, at one point in 2019, OnePlus was selling more phones than Apple and Samsung combined. Now the question is in spite of the phone market being so crowded with Vivo, Oppo, Samsung, Huawei, and Apple, how did OnePlus become a legend.
The answer to this question lies in this pricing chart,
Now if you look at the pricing of phones in India back in 2019, you will see that iPhone was the costliest with the pricing of Rs.85K+, then we had Samsung S10 priced at Rs.55K+ and then straight away we had Oppo, Vivo, and other companies that were primarily focused on selling phones below Rs.25,000.
Now although they had costlier phones, in India, the focus of these companies was more on Rs.25,000 and below price range. Now you see, there is a huge gap that's left out between Rs.25,000 to Rs.55,000 rupees which was only being addressed by Samsung then. As we all know Samsung phones do not offer as much value for money as their counterparts and this audience was the most premium unaddressed audience that was left untapped.
Here's where we saw the rise of two phones, one was Xiaomi MI 9 and Rs.31,000 and OnePlus 7 that was priced at Rs.35,000 and both these phones positioned themselves exactly in between Rs.25K to Rs.55K price range and they both had insane specs and offered way more value for money as compared to Samsung phones.
Now the question is why didn't MI 9 become a market leader like OnePlus?
Well, that is because OnePlus built a crazy level of aspirational value for its brand by getting endorsed by Robert Downey JR.
Everybody knows what an insane fan base Robert Downey JR has in India and this aspirational value is something where Xiaomi lagged because of which OnePlus won a huge market share in India in 2019.
Now, how is all this related to Boat and what does OnePlus positioning have to do with Boat?
Well if you look closely after Apple introduced the AirPods in 2016 three important things happened in the exact same year,
There was a sudden boost in the fascination of wireless earphones.
The JIO wave hit India in 2016 that led to the skyrocketing of the screen time of Indians.
Most importantly many phone manufacturers stopped shipping earphones along with their smartphones and if they did these earphones were the most basic versions in the market.
All these three factors created a huge market for hearable in India so from 2017-18 onwards many companies started jumping into the wearables market and if you look at the pricing charts of the most popular brands in 2018 this is what it looks like,
First, we had the ultra-premium wireless earphones category wherein we had Bose and Apple that had a base price of Rs.17K and Rs.15K respectively. Then in the premium category that is between Rs.10K to 15K, we had only JBL as a significant brand with its pod version being priced at Rs.10K. Then for sub-premium that is between Rs.5K to Rs.10K we had Sennheiser's wireless earphones that started from Rs.6,400 onwards and below this price point that is below 5000 there was no giant brand and yet there was a huge demand for wireless earphones in India.
This is where we saw four brands come in MIVI priced at Rs.3K to 4K, SkullCandy priced at Rs.2000+ we had Boat at Rs.1999 and then we had Noise priced atRs.3999, and then we had several local brands including Boult that were priced at Rs.999 and below.
Now the question, is with these four competitive brands what was so special about Boat that it is now the market leader by such a huge margin.
Well, there are two specific reasons for that,
Firstly, while SkullCandy was only popular among enthusiasts and among a very limited segment of the audience, the other brands like MIVI and Boult were barely known in the market. Whereas Boat had become far more popular because they had roped in Hardik Pandya in 2018 and this is where the power of celebrity endorsement comes in, just like Robert Downey JR's endorsement brought in an aspirational value for OnePlus. Hardik Pandya's endorsement by default built an aspirational value for Boat as a brand. As a result in the Rs.2000 - Rs.5000 category Boat became far more familiar than its counterparts.
Now some people might say, just because some celebrities endorsing why will we buy earphones? We are smart enough to make a good choice without endorsements! . . . Well, that’s not always the case.
A customer knowingly or unknowingly determines the value of a product based on two types of values Tangible Value and Perceived Value.
Tangible value is the real value of the product. As in if the audio sounds great in one earphone it has a great tangible value and Perceived value as the name suggests is basically the judgment that you make based on how the product is portrayed.
The fact about audio devices especially earphones is that only trained ears or only the people who are involved in video editing or sound editing can actually spot the intricate differences in audio whereas the naive ears will not be able to tell the difference in audio quality between two devices, as a result, you can barely spot the difference between two products as a result of the entire audio market from the customer standpoint is practically commoditized and since there is no added tangible value to the product that you can spot the only value by which you will judge an audio product like your phone is by perceived value.
So if I place two earphones one of some random brand and the other that is being endorsed by Hardik Pandya, you are more likely to trust the latter than the former. Even if you are not a diehard Hardik Pandya fan so the only delta that inclines you to purchase a product like your phone is the perceived value of the product.
This is the reason why Boat obsessively focuses on presenting itself as a lifestyle brand to build an aspirational value for itself both with endorsements and design.
So after Hardik Pandya, they also roped in Rishabh Pant, Shikhar Dhawan, Bhumra, and Prithvi Shaw 2019 followed by Neha Kakkar, Kiara Advani, and Karthik Aryan after that they also signed up Shreyas Iyer and Diljit Dosanjh in 2020.
Boat also collaborated with celebrity designer Masaba Gupta to launch a limited-edition collection of spunky headphones at the Lakme Fashion Week 2020 and now they're also collaborating with BIRA which is again one of the favorite millennial brands in India.
This is how just like OnePlus was able to present itself as a far more premium and familiar product as compared to Xiaomi MI 9. Boat through its collaborations has been able to build the same aspiration value to stand out from the rest of the crowd.
Even today at the entry level in the earphones market boat is still priced at a bare minimum of Rs.299 because of which a student is more likely to buy a boat and when he loves it three years later after he graduates when his purchase power increases he is more likely to buy a Boat product.
This is how by building a Quality Product, by choosing a wonderful Time to Enter the Market, by Standing Out from the rest of the competition through lifestyle marketing and through strategic collaborations, Mr.Aman Gupta and team have turned Boat into a market leader in the hearable segment of the Indian market.
Lessons from the Case Study:
Whenever you launch a product in a crowded market always try to figure out how you are going to differentiate yourself in the presence of the big brands.
Celebrity endorsements although looks like a cash drain in some cases even today it could be a game-changer in a crowded commoditized market.
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