The Hindu Business Line : Philips eyes 50% rise in hi-fi systems sales

WITH the hi-fi audio systems seeing a recovery in the past year, consumer electronics major Philips India is eyeing a 50 per cent volume growth increase for its hi-fi products in the current year through price corrections and the launch of products with value-added features.

"There has been a price erosion of about 10 per cent in the industry in the past one year, with about all the players reducing prices. While the hi-fi systems category had been seeing negative growth, the period January-October 2003 saw a one per cent value growth in the category," says Mr Ritesh Jain, Deputy Manager, audio marketing - CD systems, Consumer Electronics, Philips India.

Philips too has "corrected" pricing for certain products in the category and has also introduced new products with a highly competitive entry-level pricing.

For instance, Philips' has launched an entry-level VCD-based hi-fi system priced at Rs 10,990, while its entry-level DVD-based hi-fi system has been priced at Rs 18,990. The company has also rolled out a DVD player priced at Rs 4,990.

"With DVD systems becoming more affordable, we are expecting about 30 per cent of our total hi-fi systems sales to come from DVD systems. This figure should go up to 90 per cent in the next 2-3 years," says Mr Jain.

With affordability driving sales for hi-fi systems, there is an increasing demand for the product category coming from the non-metro markets as well. While about three years ago, the sales break-up between metro and non-metro cities was 80:20, the figure is pegged at 60:40 at present.

Financing too is driving sales for the product category. Philips, which is in the process of tying up with several financial entities for providing consumer finance for its products, says that about 20-25 per cent of its total hi-fi systems purchased are financed.

Meanwhile, in a bid to consolidate its market share in the hi-fi systems market, Philips will be increasing its advertising budget this year. For the current quarter, the company is planning to raise its ad spend by about 30 per cent on the category as compared to last year.

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