The Hindu Business Line : What BPL should do ...

WHAT should Sanyo-BPL do to get it right this time round? Girish Bapat, Vice-President (Marketing) of LG Electronics, says it could be difficult for a new player to find shelf space as the retail end of the market is not expanding as it used to. Hence, there isn't much a new player can do unless it comes up with something innovative.

Bapat said the entry of a new player might not trigger a price war because prices have been coming down even without the entry of newer players. Therefore, the challenge for a new player will be to come out with the right pricing and the right product.

Ruchika Batra, who heads Samsung's corporate communication division, too believes that the success of a new player will be based on product positioning. "The success of a product will be decided on how well a player positions its product," says Batra.

Abacus consultant Sabharwal wants Sanyo-BPL to build on its strengths. According to him, BPL had a very good presence in the non-metro cities and towns, especially in the South. "They had a strong regional presence. They need to cash in on that," he says. If the company backs it up with service excellence, it could become a strong regional brand and then can expand its presence to the metros.

Sanyo-BPL's marketing head, Rajagopalan, however, believes there are several areas where the company has an advantage over others. He says the customers will find BPL products aren't sold at different prices in different show rooms. "The customer won't feel that he could have got the product at a cheaper price in another shop. But you can't say the same thing about Korean products," says Rajagopalan.

Usually, the dealer can play around with the margins by passing on some part of it to the customer. For example, a dealer can get up to 15 per cent of the total cost of the product as margin. It entirely depends on him how much he wants to pass on to the customers though the industry standard is around 10 per cent to the customer and the rest for the dealer.

There is, of course, the oft-repeated example of how Whirlpool, when it made its entry into the market, was literally driven away by the Koreans. Whirlpool got into a tangle over whether it should give credit to the dealer or have a cash & carry model. While the Korean companies stuck to the cash & carry model and gave away a lot of freebies to the dealers, Whirlpool decided to give credit, but then dealers defaulted on payment, which eventually snowballed into a major crisis. It is a concern for Sanyo-BPL. Rajagopalan believes dealers want BPL back in the market. He says that soon after the Sanyo-BPL venture kicked off, the company invited dealers across the country to Delhi for a presentation. "We were overwhelmed by the response we received. Some of the biggest dealers in the country didn't mind spending two full days with us," he says.

Rajagopalan has a target for all the products. While Sanyo will launch products in the entertainment electronics, digital products and appliances categories, BPL will focus on the consumer electronics space. In the CTV market, BPL expects to have a market share of 10 per cent in three years, while Sanyo expects 6 per cent. In volume terms, the joint venture expects a 16 per cent share and in value terms, 20 per cent.

In the washing machine category, six models will be introduced initially. The joint venture expects an 18 per cent share in the fully automatic category and 10 per cent in the twin-tub category. In the refrigerator section, it will initially introduce six models. In the frost-free category, it expects a 10 per cent share and hopes to become a market leader in three years. In the microwave market, it will introduce three models and expects a 16 per cent market share.

Rajagopalan says that as BPL will play the volumes game, it will give enough time for Sanyo to establish itself in the market. "We are going to pick and choose our battles," he says.

What remains to be seen is whether the market will allow the company that kind of freedom.

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