The Hindu Business Line : Electrolux's single brand strategy

RECENT studies have criticised Electrolux's decision to phase out the Kelvinator brand from its portfolio this year, stating that the move is sure to result in a loss of sales for the company.

In fact, the competition seems equally candid about stating that the move is sure to serve Electrolux's competitors better.

LG Electronic's product group head for refrigerators, Ajay Bajaj, for instance, feels that the move to withdraw the Kelvinator brand would certainly benefit the competition, especially in the direct cool segment, as the brand Kelvinator had a very high brand recall among consumers.

Whirlpool, which a recent study pointed out would be the most likely beneficiary of this move, expresses a similar opinion.

However, explaining the rationale behind phasing out the brand, Rajeev Karwal CEO and MD of Electrolux Kelvinator is of the firm view that the company's single brand strategy would prove to be a positive move and is optimistic about garnering a significant increase in sales this year. "We found that despite offering an excellent product, the perception in the consumer's mind of the Kelvinator brand was that of a low-end, direct cool brand. It was not preferred to the multi-national brands in the market. So, in other words, we had the Kelvinator brand which was on a downward gradient and Electrolux, which is considered as a premium, multinational brand, on an upward one. We figured it was easier to put our energies behind a growing brand rather than use it to stop a brand which is going down. In the case of Electrolux, we do not have to win the product positioning battle," he explains.

The strategy, avers Karwal, has worked with the months of January and February (Kelvinator was phased out from this year onwards) seeing "excellent" sales.

At the same time, the Kelvinator brand has not totally vanished at the dealer level. In order to keep the potential Kelvinator consumer informed, the company has stuck stickers inside its direct cool refrigerators which explain that Kelvinator is now Electrolux.

Also, through this strategy, the organisation hopes to reap advantages of economies of scale through lower spends on media and brand building in the long run.

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