The Hindu Business Line : Catching the wave

DOMINIC Waters is just over a month-old in his new job as Director (Marketing), Bose Asia-Pacific. But his association with the company, founded by Amar Bose in the US, goes back nearly two decades, when he joined it as regional distributor.

He then started a production house but rejoined Bose Australia in 1999 as business development manager for the professional sales division, scaling up the ladder to become Asia Pacific marketing manager two years ago.

In this current position, Waters is responsible for guiding product development and marketing initiatives for the region. He was in Chennai for the launch of Bose's products, including a wireless audio link that allows music to be heard in multiple rooms at the same time.

Catalyst asked Waters to compare the Chinese and Indian markets. The good news is he finds both the markets hot, and he holds a similar view about Indian food!

Excerpts from the interview:

When you compare the other countries, how do you see India doing?

We are extremely happy with the way India is moving ahead. We are seeing extraordinary growth rates, higher than that of any other Asia-Pacific areas. We are also enjoying very good growth rates in West Asia and China. And as we build the infrastructure in all three regions, including India, we expect to see strong growth in the foreseeable future but there is no doubt that we are extremely happy with the way India is progressing at the moment.

Are growth rates in India higher than China and West Asia?

In general, yes, they are.

Are economic conditions and consumer behaviour similar in all these countries?

They are not. I think we have different levels of maturity and stability in economies around the Asia-Pacific region. I think I will probably draw a parallel between China and India in the way their economies are changing a great deal.

We see the disposable income and standard of living in both these countries increasing, which is going to be good for everybody.

Do you have similar ways to address these markets?

Depends on the level of maturity of the businesses. We would treat and run our business differently for, say, Singapore or Australia than we do in India and China. Because with India and China, and some parts of West Asia, it's really new business for us. We are still on the growth path whereas our more mature countries are down to a level of stability and steady growth. So, the levels of growth that we would expect from our more mature countries are going to be less that what we would expect from our growing countries.

Would your strategies change accordingly?

Our strategies do change, yes. We have different levels of branding and different levels of marketing and communications. But it really does come down to the fact that we are a diverse area in Asia-Pacific. We have many different cultures, many different ways of doing business and the markets react differently to the kind of products that we sell. I think the key to going forward is that we have an over-arching strength in the way we communicate our products, and we saw some of that today: simplicity, elegance, performance, and expandability. These things become generic in our communications but our marketing is localised. And that depends on the level of maturity and level of understanding of those we are trying to pitch to. It really has to be localised, as far as we are concerned.

Do you see India, China and others growing to be really big markets?

There is no doubt that they are; by sheer weight of population, the consumer base is large. But it's also perhaps fragmented. It's not as easy to pinpoint and not easy to find. But nonetheless, the buyer is the same wherever you go in the world. If they aspire to a Mercedes-Benz or a Bose system, they will find it. And we will find them, somehow. But again, the levels of maturity have a lot to do with that.

How much freedom would a person in charge of a country have in terms of drafting strategy?

A lot. It's key to us to ensure that we never lose sight of the fact that we need to communicate to a country in a way that the country will understand and accept. So, we would never presume to have one over-arching creative or communications strategy for all countries around the world. We know that that would just not work. We place a great deal of importance and responsibility on local marketing to ensure our messages are communicated.

For example, Ratish (Pandey, GM, Bose Corporation India) was saying earlier that Bose doesn't have channel partners here. So, would that be an over-arching policy? Not really. We have a want to go direct, and the reason we do that is because we firmly believe that our story needs to be told, our value proposition needs to be communicated, and we need to make sure the consumer is educated as to why they are getting such great value in our products.

So, in India, this direct method of selling allows us very, very good opportunity to do that in a structured way. Where we don't have that, we do aspire to have a similar method even though in China and Australia, for instance, we go through a reseller base. In China, they are all still Bose stores and they follow the same method. In Australia, we have a mix now, but we have a growing band of Bose stores which are also third-party owned. To answer your question, yes, we do have a desire to, and wish to, communicate our message properly through a Bose identity store.

Obviously Bose will be more popular in India ...

Yes, it's interesting. We have varying levels of brand awareness around the world and there's no doubt that we start on the right foot in India and that's fantastic for us. And we know that we can build great brand awareness around our name. In the market that we started, that's in the US, we are very well known. Our brand awareness is exceptional. In some of the markets where we are very new, such as China, we have got a long way to go but we are increasing awareness through more stores and better ways of communicating to our consumers. For our demographics, we are extremely well known and sought after and that makes us an aspirational brand. And word of mouth has a lot of way to do with that, as well.

The China foray has been later than India's. We have carried out business in China through a distributor but we are just coming up to the third anniversary of having our own China subsidiary, and that for us is very new business. Our former distributor, though he did very well with the brand, he didn't do as well as we thought the market was capable of achieving. And that has proven to offer good dividends to us. In the last three years, we have grown our business substantially and we have grown our standing in the consumer electronics industry.

Is the grey market a bigger problem in China than in India?

It does exist, there is no doubt. But it's not as great as we find in India. To import products into China is difficult because there are several gates at the duty and customs area that will not allow those things to happen. There are lot of people who might want to do that but know it's much more difficult to get the product into the market, so they do less.

Where we do have a problem is with the proliferation of counterfeit. There's a lot of manufacturing going on in China, and they make some very good look-alikes. That's the problem there, in Vietnam and in Indonesia too, to an extent.

Do you plan a manufacturing facility in this area?

At this point in time, we have facilities in the US, Mexico and Ireland and enough capacities within them to sufficiently look after our needs for the foreseeable future. If and when, as expected, we do get to a stage where we need more manufacturing facilities, no doubt we would do our due diligence. At this point, there are no real plans to increase our capacities as we don't need it.

Business is booming

IT has been nine years since Bose set up shop in India. The company is happy with the progress that it has made all these years, enabled by a robust economy that has propped up disposable incomes.

Bose kicked off its operations with its professional systems division (the other division being home audio), and the reason was that "we weren't allowed to import speakers and complete systems in 1995-96," says Ratish Pandey, General Manager, Bose Corporation India. Its first store came up in 1998, and that too "with specific approvals from the Government" to get its lifestyle series. Four years and only one more store later, the company decided that it was time for the big push, what with the `negative list' out of the way.

"By then, the professional systems division was growing well. And therefore, we could invest in new stores. But our key investments in new stores really started in 2003. Now, we have added seven more stores."

The broader plan is to invest the bottom line in additional stores. And with the professional division being "a mature business" now, the company says the growth is coming from home audio.

Bose India has been introducing newer products and is eyeing untapped markets. "We have opened a store in Ahmedabad recently. We have Pune on our radar screen, Kochi and Vizag. These are the cities from which growth in going to come. But the initial focus is Kolkata and Pune, and then we will look at Kochi and Vizag."

The negative list may no longer be there, but the high import duty (effective rate of 55 per cent) is "a reasonably big factor," says Pandey. "And part of the reason is India has Dubai and Singapore on two ends, which are pretty much zero-duty ports. And when you are looking at a global consumer, you are competing with them. And most of our consumers are mobile enough to travel abroad. And that does impact us."

But, he says, "with the kind of growth that we have seen ourselves, we are not overtly worried about it. I am sure over time, things would settle down. And, globally, there would be a reasonable price parity."

Unlike many others who believe the market will explode in a few years, Bose says the good times are already here. "My reading is growth is not showing any abatement. We are continuing to grow strongly. Each city, in which we have opened a store, has surprised us."

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