Sellers want volumes. Buyers, discounts. Who will win?

Come festive season, white goods will start appealing more to consumers. Which way will the balance tilt in the buyer-seller equation is hard to predict.

Nothing symbolises the great cultural divide between ethnic India and much of modern America more than the very months when the hustle and bustle in the name of festivities begin in these geographies. This year, just like in the past, while marketers in India are already warming up for the annual rapture, those in America know that they have yet another quarter to go before the carols fill the air.

They know their audience, do the marketers in India. They know the time too. The murmurs and the amens make that obvious. As for the consumers, they love the message of the season that come in the form of discounts on various labels. The sudden rush of spoilt-for-choice emotions in the buyer category, make the messengers loved too, especially if you talk about the Rs.65,000 crore-a-year topline earning consumer durable sector. For their lot, the weeks leading to Dushera and Diwali festivals each year, mark a season of overflowing coffers that provide them adequate spiritual nourishment for the rest of the financial year. How?

That the plasma screen and refrigerator-buying consumers will exercise their right to splurge lavishly during the festive season is a given in the Indian market. But the consumer durable players in the hope of making the most of the excitement generated do their bit too. Most even prefer going easy on their marketing expenditures for most part of the year, so that they can get generous in their efforts to attract eye balls during the festive season. As per a market expert, the target for most consumer durable companies is to be able to generate on average, 30% of their annual sales during the three month period leading to end-November, after spending as much as up to 33% of their advertising and marketing budget during the same period.

No different is the plan this year, despite a non-impressive performance by the sector so far in FY2011-12, which primarily reflected the impact of persistently `est rates on demand for consumer durables. During April-July 2011, the category showed a y-o-y growth of 4.2% [lower than the IIP growth of 5.8% for the period], as compared to a much higher 18.4% during the same period last year [higher than the IIP growth of 9.7%; as per the Central Statistics Office & ICRA]. Most cons. durable players have lined-up various initiatives to lure the buyers. For instance, players like Sony, Panasonic, LG, Samsung, Sansui and Godrej are betting big on both the flat panel TV and the home appliances categories. The idea is to achieve more than 50% y-o-y jump in sales during the mid-September to end-October period this year.

Samsung, which reported sales of Rs.16,740.5 crore in the country in FY2010-11, is eyeing a 30% rise in sales during the two aforementioned months. The company plans to dole out freebies worth Rs.150 crore to lure customers during the 45 day promotional campaign ‘Samsung Smart Utsav’ (which started from September 15, 2011). With a new line up of slim TVs, and mass-targeted washing machines, the aim is to achieve Rs.2500 crore in sales during the festive period alone. Surprisingly, the other chaebol LG does not sound all-optimistic about the festive period. As compared to 2010, it has reduced the festive season marketing budget for this year by around 15% and hopes for a y-o-y jump in sales of 25%.

Japan-bred Sony is betting big on its Bravia range of TVs (which contribute to 35% of its TV sales) to achieve a 30%-plus sales growth with a turnover target of Rs.2000 crore during the season. It has introduced 15 LED TV models, with sizes ranging from 22 to 65 inch. Sony has allocated Rs.155 crore as marketing budget for a 360 degree multi-media campaign “The Rebirth. LED TV”. This will include both ATL & BTL activities, such as TV and print commercial, online, PR, outdoor and shop-front. While talking about his expectations for the month ahead, Masaru Tamagawa, MD, Sony India, says, “Our clear focus is on the Bravia range, which is the biggest contributor to our sales. We aim to sell 400,000 units of Bravias during the festive period.” Sony’s other focus area will be its Cybershot camera segment, where it has launched about a dozen low-end models to increase penetration and sales.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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