From cathode ray tube (CRT) TVs and noisy air coolers to flashy ultra HD TVs and silent split air conditioners, the Indian consumer is now spoilt for choice. The last two decades have marked the rise and fall of several brands and technologies. It also marks the Indian consumer's fast changing priorities and preferences.
The liberalisation of the economy saw the entry of international players in early to mid 1990s, in the Indian consumer durable market that was largely dominated by a few domestic players. With the arrival of global players, came in new technologies.
The availability of loans and financing schemes made consumer products like refrigerators and television sets more affordable and provided the much needed boost for the durables companiesw in the early 2000s. This was also when air-conditioners, once considered a luxury, made their way into middle class Indian homes.
The late 2000s saw the advent of aspirational products like HD Television. This was also the time when some Indian players managed to make a mark and consolidate their positions as the rural Indian consumption story began to unfold. Today the rural market is growing faster than urban India although the penetration level is much lower.
Indian durable space also witnessed in the past few years the domination by Korean brands as they tapped into the opportunity presented by rising income levels, double-income families and increasing consumer awareness.
What made the Korean brands so successful? Deba Ghoshal, Marketing Head, UPBG, Voltas and industry veteran, believes they focused on product innovation and product differentiation to woo customers. He said the Korean companies were the first ones to pamper the dealers and distributors and channel partners offering them better margins than others that motivated them to push sales. These companies invested in the future, focused on research and development and manufacturing in India rather than rely only on imports which helped them price their products just right.
Added Rachna Nath, Executive Director, PwC India, what helped the Korean brands also was their focus on after-sale service.
In recent years though the best practices have spread across and both international and Indian players are giving competition to the Korean brands, even as Korean brands continue to maintain market leadership.
What has also changed dramatically in the last 2-3 years is the advent of smartphones for Indian homes and every durable firm wants a share of the pie. The reasons are clear. Technology and connectivity have become important. Indian consumers today are more willing to spend on upgrading and changing their smart phones every two years while postponing similar upgrades for other consumer product.
All durable firms are either well entrenched in the handset business or looking to grab market share.
Industry veterans and observers also believe it is not necessary that Korean firms will lead the next revolution in the durable space and it can be anyone's game.
The huge Indian consumption story has given confidence to some Indian players to rethink their strategies.
In July this year, Mirc Electronics, which owns brand Onida, said that it is re-organising and restructuring its strategy. “In the last decade or so, the Indian consumer durables market has been dominated by MNCs. ONIDA is now strategising to change this and gain leadership in the growing consumer durables market,” it said. It has roped in industry veteran Y.V. Verma from LG to spearhead this strategy.
Outlining its strategy the brand said, “Over 54 per cent of the Indians are below 25 years of age and after every five years India is becoming younger by 2 years...this new age consumer is looking for products which reflect their attitude and define them. ONIDA plans to capture this consumer by launching a wide array of products thereby becoming the single brand to satisfy all needs of Indian smart homes within next five years,” it said.
Asked about the challenges ahead for the durables market, Verma, chief executive officer, Mirc Electronics, said, “It is certainly an uphill task for Indian brands. They need to diligently work to revamp their systems, processes and have the money power to beat international competition. But their biggest advantage is that their ears are on the ground and they know what the Indian consumers want.”
Besides the television segment, where it has a strong brand equity, the company is looking to strengthen its market share in air conditioners, washing machines and microwave ovens. The company has also entered the mobile phone segment.
National players like Onida are not alone. Other companies which had manufacturing ventures with international players in the 1990s are looking to make a comeback. Take for instance a segment like televisions. Salora, a brand of television sets that was established in 1968, wants to tap into the opportunity of the fast growing LED segment, to offer larger screen experience at a competitive price, while continuing to manufacture CRT TVs. In the early nineties, the company had entered into a tie up to sell television sets under brand Panasonic and brand Salora took a back seat. But last year the company decided to enter the LED segment and revive the brand.
Gopal Jiwarajka, Managing Director and Chairman, Salora International, said while most international brands have stopped making CRT tv sets, as long as there is demand the company will continue to make and sell them.
Asked about the brand's strategy to make a mark in the LED space, he said, there is a huge opportunity as television viewers are fast switching to LED TVs especially in tier 2 and rural markets.
As per estimates by Frost & Sullivan, digitisation, reduced replacement cycles and increased affordability are driving growth in the Indian flat panel display (FPD) television market and the flat panel TV market in India is expected to touch the $6.39 billion mark by 2015.
Jiwarajka believes that just as the mobile phones segment, where Indian brands are giving international brands a run for their money, a huge opportunity lies in the flat panel television space.