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If you were disappointed with no ‘freebies and discounts’ fireworks during Diwali last year, then relax; it was just the first punch at your ‘value-for-money’ sniffing nose. More punches are yet on their way! With summers hitting the weather-clock faster than ever, the consumer durable giants are not willing to leave any space for cool breeze to gush into. And you can’t afford to blame the suppliers too, for even if we just go by numbers, the period between April to December 2008 have been the worst for the durable lot in the past three years. The sales reported by the sector fell down by 30% in November and 3% in December as compared to the same period, the previous year. So which products have actually taken the maximum hit? Oh! Unfortunately, it’s the super-cool Air-conditioner and the ultra-clean washing machine. Sales for ACs during December 2008 grew at just 9% y-o-y (as compared to 65% during last year) and for washing machines, it grew at a measly 8%. So, the pertinent question here is not whether discounts will flow in thick, it’s whether the companies can emerge from the crisis in the coming summer? And if yes, then what are the plans for the same?
Well, after witnessing sluggish sales last year, the companies are looking at offering combo-products and gift vouchers instead of discounts to woo customers this season. As Ramesh Srinivas, Head of Consumer Markets, KPMG India explains the rationale behind it, “This shift from discounts is driven largely by the adverse impact on the margins. Design and delivery will also be in focus, with customers looking to get value for money in these trying times.” Then there are also others who look forward to the season ahead, hinging hopes on certain product categories, one like Masaru Tamagawa, Managing Director, Sony India who explains why it is the right time for Sony to widen the gap from competitors, with the advantage of capability and quality through the new products. He avers, “Broadly the categories which are strategic growth categories for Sony are LCDs, Laptops, Digital Still Cameras, Home theatres, MP3 Walkman and PlayStation. But Consumer Audio Visual (CAV) market is the one which we are betting heavily on, as the company estimates the CAV market size to be Rs. 125 bilion out of which Sony had a market share of 18% in FY08...” The preference shifts where Samsung India is concerned. It launched 18 new split and 7 new window AC models, and is eyeing around 50% growth in AC volumes this year. Now that’s a start!
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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