Project Report on Zerodha

Group 05
Ankusha Patil PGP12229
Atharva Patankar PGP12260
Himanshu Goyal PGP12247
Mudit Sailot PGP12245
Rahul Jain PGP12256
Sangidwar Vanshika Manoj PGP12198

Submitted in partial fulfillment of the course requirements for the Marketing Management II
(MM-II) course to

Dr. Neha Bhardwaj

Associate Professor - Marketing

Indian Institute of Management Rohtak

Date: March 17, 2022

Acknowledgment
We would like to acknowledge our sincere gratitude and thanks to our Marketing Management
Professor, Dr. Neha Bhardawaj for her valuable suggestions, insights and handholding all
through this project work.

We are thankful to all our batchmates, friends and relatives for their invaluable help in
completing this project. Finally, we are grateful to our family members for their unstinted
support and constant encouragement.

Letter Of Transmittal
Dr. Neha Bhardawaj
Professor
IIM Rohtak

Dear Mam,

Sub: Marketing Management Project on Zerodha

As per the guidelines provided by you during the classroom discussion, we hereby submit a
report after going through the entire notes and scrutinizing the facts and data from various
sources. The report contains the relevant facts in the introduction, STP analysis, Communication
and Distribution Strategy of Zerodha, etc.

Kindly evaluate the same and provide your valuable input.

Thanks & Regards

Group 5

Table of Contents
 Acknowledgement
Letter of Transmittal

1. Introduction
2. Market Standing
3. SWOT
4. STP
5. Channels of distribution
6. Analysis of channel integration
7. How does Zerodha make money?
8. Major channels of communication
9. Major advertising campaign
10. References

Introduction
Zerodha Broking Limited also called Zerodha is an Indian financial services company that offers
currencies and commodities trading, retail brokerage, mutual funds, and bonds. The company is
headquartered in Bangalore. Founded in 2010 the company aims to break all barriers that traders
and investors face in India in terms of cost, support, and technology. The name Zerodha is a
combination of Zero + Rodha, where Rodha means barrier in Sanskrit.

In terms of active retail clients, Zerodha has become the biggest stockbroker in India. The credit
goes to the company's disruptive pricing models and in-house technology. More than eight
million clients place millions of orders every day through the company’s powerful ecosystem of
investment platforms, contributing over 15% of all Indian retail trading volumes. Along with
this, the company operates various popular open online education and community initiatives to
empower retail traders and investors. It has a fintech fund and incubator by the name
“Rainmatter” with the goal of growing the Indian capital market.

Market Standing

In India, there are over 300 stockbrokers registered with SEBI and other stock exchanges. There
are 265 registered stockbrokers in India as of 30th November 2021 on NSE. Zerodha is a
privately held company, which is a registered member of SEBI, BSE, MCX, NSE, NCDEX, and
CDSL. It has a market share of 18.85% with 33.9 lakh active investors. Some of its prominent
competitors are Upstox, Angel Broking, ICICI Securities, etc. The brokerage of Zerodha is ₹20
per trade. It provides brokerage-free equity and mutual fund investment.
 Source: Tradebains

Where does Zerodha operate?

‌Zerodha is a financial service company that offers various retail and institutional-based
brokerage, bonds, mutual funds, and currencies & commodities trades. Zerodha operates in
various states of India including Hyderabad, Bengaluru, and Pune. The company is
headquartered in Bengaluru.

Key Products and Services of Zerodha

‌The broking limited company, Zerodha offers tons of key products to its customers. These
products include Console for account management, Kite for trading platforms, Varsity for
financial education, Quicko for the traders in Tax stems, Coin for Free Mutual Fund, Kite
Connect API for the developers, Kill Switch for the risk management for retail traders, and
Sentinel for the cloud-based market alert tool.

SWOT Analysis
Zerodha is an online discount brokerage firm established in 2010 by two brothers, Nithin
Kamath and Nikhil Kamath. Internal elements like strengths and weaknesses and opportunities
and threats have an impact on Zerodha.

Strengths-

The ability of a corporation to plan its expansion is its strength. Zerodha has some advantages
that have helped it become India's largest brokerage.

 It has an excellent and interactive user experience which provides a positive experience
that helps the company to build user loyalty towards the product or brand. It also defines
the user journey on products that are most conducive to business success.
 Huge participation from a younger audience. Zerodha has shifted its strategy to word of
mouth as most of the population is afraid to invest in stocks because of the brokerage
charges. Additionally, the technology used was outdated and inefficient. So, they started
concentrating on increasing your brand's credibility. The next step is for them to begin
educating millennials about trading.
 Established itself as a trusted brand. Through this, they were directly able to connect with
the customers, employees and the general public. They let their audience know about
them and ultimately distinguished themselves from competitors with the word of mouth
strategy.
 It has a huge crowd of active users. There are approximately 2.5 million users In India
with a healthy market share of 18.33% and over 54.84 lakh active customers compared
to 2.99 crore active users on NSE.

Weaknesses-

Everyone has strengths and weaknesses, and Zerodha is no exception. Even though Zerodha is
the industry leader in stockbroking, the company's expansion is threatened by several flaws.
  Lack of marketing strategy. Although Zerodha is a successful 12-year-old company,
it still functions or advertises through word of mouth without investing huge money
on digital, social, and print media.
 Frequent technical glitches. Zerodha has always focused on providing its customers
with efficient technology. Still, it has been observed that there is a time when the
server is low, or any other such technical glitches occur.
 At times of need for customer care, Zerodha has not been able to cater quick customer
care support to its users.

Opportunities-

No matter how successful a company becomes or how higher is the rate of growth of a company.
There have always been opportunities for improvement, for Zerodha following are some key
improvement opportunities.

 Scaled business. Even though the yield per customer obtained is lower, it is simple to
scale up to a large number of customers. Higher-yielding products such as mutual funds
(beginning in February 2016) and insurance products (starting in August 2016) should
boost partner revenue significantly.
 As it has been noticed that they lack efficient customer care support, they should aim to
eradicate it to increase their customer base ultimately.
 They can enter an entirely new field of providing trading services to their users like
HDFC, ICICI, etc.
 The majority of our business comes from major cities such as Bangalore, Hyderabad,
Chennai, and Mumbai, to name a few. But there is a strong possibility of expanding our
business in smaller locations, particularly with the exponential surge in Internet access.

Threats-

Some of the threats to Zerodha as discussed below-

  Inflation is one of the biggest threats to the stock market and Zerodha. As the pandemic
has globally affected the stock market.
 Threats from competitors like ICICI, HDFC, Kotak, Angel Broking, and Upstox. As
competitors react to the strategic activities you take in the marketplace, your company
must respond to their strategic movements. Competitive forces impact strategy.
 Entrance of newcomers like Paytm money, Groww, etc. They would try hard to acquire a
larger market share and might become your potential competitor in the future.

Segmentation Targeting and Positioning

Segmentation:

1) Demographic segmentation: Demographic segmentation is a market segmentation

approach in which the target market of an organization is segmented based on
demographic data such as age, gender, education, income, and so on. Demographic of
Zerodha consists of young males and females between the age group of 30-55 who
are working professionals.
2) Geographic segmentation: Geographic segmentation is a marketing approach that is
used to target products or services to individuals who reside or shop in a certain place.
It operates on the premise that individuals in that area have comparable requirements,
desires, and cultural factors. Consumer group of Zerodha is primarily based in
metros, tier 1 and tier 2 cities like Mumbai, Pune and Bangalore, etc.

Targeting:

Based on the typical age group of persons under 30, Zerodha primarily targets its prospective
audience in Pune, Bengaluru, and Hyderabad. It concentrates on those under the age of 30, who
are new to their careers and have already begun saving from their wages and are looking for
better saving and investment ways to efficiently expand their money. It has over a million active
consumers because to its excellent services and goods.
Positioning:

Zerodha was launched with the aim to give consumers technology-efficient and cost-effective
services. Many young users were afraid to try stock investment because of the brokerage
charges. Kamath's brother knew that it is time to change and allure young minds with service that
doesn't require any technological expertise.

The owner of the company believes that there is no better marketing than word of mouth. He
doesn't spend huge chunks of money on the advertisement. Instead, they start focusing on
building brand credibility.

Zerodha analyzed their customer mentality, and they knew if stock marketing would become an
impulse, it won't benefit them. So, they started shifting their focus to word to mouth marketing.

Channels of Distribution

Zerodha’s initial proposition was to offer highly discounted transactions with a significantly
better user experience. But, they did it with offline mode. Instead of going only with Google and
Facebook, Zerodha went with an offline acquisition strategy. For the first thousand odd
customers, Nithin himself carried account opening forms and used referrals to open doors.

They also made sure that users who actually signs up start using the service. Fast forward eight
years with this strategy, Zerodha today is the second largest brokerage (by customers) in the
country and the largest by volume. Over 2 million trades a day.

All of this is on the back of 900 sales people, nearly 600 of whom are engaged in customer
activation. Offline distribution strategy is not unusual in tech companies. Most SaaS Enterprise
companies have a large direct sales force. It is however unusual to see such a model in a B2C
business.

Concluding from this is that offline distribution channels can be an effective way to jump start a
company. Even for a consumer company. Especially if the product is something that is
unfamiliar to the user

However, the business model would make sense only if it can sustain a customer life time value
(LTV) that can compensate for the higher costs of an offline acquisition. Ultimately digital
acquisition is higher reach and lower cost to reach the end user. Offline could be old world, but
deserves due consideration in any new age startups’ distribution strategy.
 Analysis of channel integration
Zerodha was launched with the aim to give consumers technology-efficient and cost-effective
services. As young customers were put off by hefty commission fees when it comes to trading.
He took advantage of it. They believed that there is no better marketing than word of mouth.
They didn’t spend huge chunks of money on the advertisement. Instead, they focused on building
brand credibility. Rather than investing in an advertisement, they came up with the idea of giving
commission to their referrals. Many bloggers and YouTubers promote them through affiliate
programs on their platform, and in return, they earn commission on every purchase. The referral
program helped them to get discovered by thousands of leads that too without zero upfront cost.

They kept their users engaging on the platform by offering to educate about blogs and much
more. Varsity offers content that educated the users, and it brings a chunk load of traffic.

The reason for their no advertisement was that most users don't make impulse purchases when it
comes to stock marketing. Trading involves investment and the risk of losing money, so the
users try to be very cautious and attentive. And the following reason why most people prefer to
invest in the stock market is because of greed. The greed to double up their money. Zerodha
analyzed their customer mentality, and they knew if stock marketing would become an impulse,
it won't benefit them. So they started shifting their focus to word to mouth marketing. Most of
the users on Zerodha are recommended by another. Such users won't lose interest in trading
because they really want to make the best out of it.

They used vertical integration strategy which allowed them to streamline operation and taking
direct ownership of all the various stages of service and production for consumers.

How does Zerodha make money?

‌Zerodha is the biggest trading network with the highest number of active users in India. People
across India use Zerodha for investing and trading. The company charges only Rs. 20 (or 0.03%)
for every F&O and intraday capital trade.

Although its charge is pretty low but as a huge number of transactions takes place, the company
gains enough profit. Besides for the account maintenance, it charges Rs. 300, annually.

‌From the records of the past few years, Zerodha experienced rapid growth. This results in the 2%
contributions of investors in the stock exchange. This, later on, boosts the revenue of the
company. With this revenue source, Zerodha raised its valuation worth $1 billion. Today, the
value of Zerodha is around $3.3 billion.

Zerodha’s Channel of Communication and Advertising Strategy:

In just 10 years, it went from 0- 1-billion-dollar valuation – 400+ profit in 2020.

It follows Zero Marketing Strategy-

In this system, there are tons of inefficiencies and hurdles- this prevents people from moving into
a more efficient system (Preventing the common people in India from investing in stocks.
Zerodha removed this inefficiency in the financial world.

Instead of an Advertising Campaign Zerodha adopted 3 Strategies-

1) High Consumer Tolerance

2) Unique Brand Proposition- Result in Word of Mouth

3) Irreversible Shift

All this will help to claim pot of Gold

Zerodha was founded with the goal of providing consumers with technologically advanced and
cost-effective services. Because of the brokerage fees, many young users were hesitant to begin
stock investing. Furthermore, the technology employed was outdated, which was a hindrance to
many of us. Kamath's brother saw the need to evolve and entice youthful brains with services
that do not necessitate technological competence.

Not only that, but he understands that in order to attract younger customers, he must provide
something unique. When it came to trading, many of the young clients were turned off by the
high commission rates. He took advantage of the situation. The company's owner feels that word
of mouth is the best form of marketing. He does not spend a large sum of money on advertising.
Instead, they begin to concentrate on establishing brand trust. The next step is for them to begin
teaching millennials about trading.

Zerodha Marketing Success Factors-

The critical factors involved in the success of Zerodha are mentioned below-

Standard Proposition - The first marketing approach was to be as transparent as possible.

Because it involves money, most consumers are wary of brokerage services. So they thought
about it and were extremely clear about everything. When the firm first stepped into the market,
several stockbrokers provided clients unreasonable and opaque pricing. Then Zerodha came up
with a typical offer with no obligations. This was beneficial to the firm. If you check at the
company's FAQ area, you'll see that majority of their users like the direct response and concise
replies. The firm does not believe in perplexing its customers.
Concentrate on New Account Opening - The second reason for their enormous success was
that they focused their efforts on attracting additional clients. They lacked a relationship manager
and a dealer. They began to concentrate on obtaining a new client. The firm now has over 2.3
million customers.

Business Affiliates and the Referral Program - The referral and affiliate programmes are
Zerodha's most powerful marketing pillars. Rather than spending money on advertising, they
decided to reward their referrals with a commission. Many bloggers and YouTubers market the
services through affiliate networks on their platforms, earning revenue on each sale. The referral
scheme assisted Zerodha in discovering thousands of prospects at no expense to them.

Innovation and Technology - The organization recognizes the necessity of change and
evolution in order to achieve long-term success. They recognized the need of leveraging
technology to provide something unique to their customers, which is why they continue to
release apps like Kite, Pi, and others. The platform was simple in the beginning, with only a few
capabilities, but as time went on, sophisticated functionality such as API integrations, third-party
apps, and more were introduced. They continually introducing new features in order to keep their
customers interested.
Digital Marketing and Online Engagement - Every business understands the importance of
having an online presence and engaging with customers. This is why they offered to teach their
customers about blogs and other topics to keep them engaged on the platform. Varsity provides
consumers with educational information and generates a significant amount of traffic. The
importance of digital marketing is that it generates a subscriber base and boosts the domain's
authority in Google's eyes. Clients also perceive service to be genuine when they receive
something in return, such as knowledge of the stock market or trading.

Conclusion and Effectiveness of Marketing Strategies-

The strategy used by Zerodha to educate their consumers first sets them apart from their peers.
Unlike a full-fledged brokerage platform, Zerodha does not offer stock recommendations. When
new traders join the site, they must first understand the ins and out of the business. Traders'
ability to grasp why they are going bankrupt or trading sensibly would generate an engaged
client base. Zerodha Varsity was created in 2015 with the same purpose in mind, as well as a
blog-connect to increase interest on the website. The Varsity App, as well as Hindi-language
materials, were introduced in 2019.

Finception and LearnApp followed afterwards. Finception focuses on making financial material
simple for its customers, whereas LearnApp charges consumers for financial knowledge.

References

● https://nextbigwhat.com/zerodha-money-marketing/
● https://www.linkedin.com/pulse/how-zerodha-used-offline-distribution-setup-online-
product-acharya
● https://zerodha.com/about/
● https://businessmavericks.org/zerodha-business-model/
● https://zerodha.com/z-connect/zerodha/zerodha-associate-program/inviting-partners
● https://tradebrains.in/biggest-stockbrokers-india-with-highest-clients/
Thank You