The Hindu Business Line : Top-end tumult

Walk into the house of a young, married couple, both in well-paid, cushy jobs, and you could encounter an apartment filled with the latest gizmos, be it a twin-door refrigerator, split air-conditioners, LCD television, front-loading washing mach ine or the latest model of microwave oven. It would be a place that can easily be termed a haven for any tech-savvy person.

In fact, the tribe of such couples and more specifically, the number of high-income, high-profile job holders is only increasing. This trend is making consumer durables and electronics companies laugh all the way to the bank, with an exponential growth in sales, more so in the high-end premium categories. “The reason for the popularity of these high-end categories lies in the fact that most of the technology innovation is happening in these categories, whether it is the introduction of full high-definition capability in large-screen LCD TVs or the Quatro cooling refrigerator (four-door refrigerator) or ‘good sleep mode’ in split ACs. The new technology introduction is accompanied by a lot of effort by manufacturers to educate consumers on the benefits of these technologies through the use of mass media,” says R Zutshi, Deputy Managing Director, Samsung India Electronics Pvt Ltd. Elaborating, he says other reasons for increased preference for high-end products amongst consumers could be higher disposable incomes, changing lifestyles and higher exposure through mass media and the Internet, creating an aspiration for top-end technology and lifestyle products.

Whirlpool of India Ltd’s General Manager (Marketing Services), Sukhpreet Singh, shares similar beliefs. “First are the increasing affluence and disposable incomes linked to overall economic growth. But the more important driver is the efforts of the manufacturers in developing these segments. Companies have focused on marketing efforts in increasing awareness about the capabilities and value additions offered by higher-end models.”

It is not only higher disposable incomes and growing aspiration that are leading to an increase in sales of these products. “One important reason is the lifestyle of the current generation of young workers. Though they get large salaries, it is the long hours they keep at work that is one of the main reasons behind the growth in sales - high-end technological products such as the microwave ovens, refrigerators and washing machines make their work easy for them. Also, several products such as mobile phones and laptops have ceased to become mere gadgets and have now become lifestyle products, also used as status symbols,” says an industry expert.

Now, which are the categories that are actually driving growth? While for some industry players it’s the split ACs and flat panel LCD televisions, for the others, the primary growth driving categories in the over Rs 25,000-crore consumer durables industry are fully automatic washing machines and frost-free refrigerators. “Overall our Bravia LCD televisions continue to be the all time favourite amongst consumers, growing by almost 100 per cent in the last year. Other categories, such as our digital imaging handycams and cyber-shot still cameras, and our range of Vaio notebooks have been registering phenomenal growth and will continue to be the key growth factors for our company and the Indian market,” says Katsuhiko Murase, General Manager (Marketing), Sony India Pvt Ltd. Sony plans to capture around 10 per cent of the notebooks market in India by the end of the financial year 2007-08, by selling 60,000 units.

For Whirlpool, it is the company’s high-end frost-free refrigerators and fully automatic washing machines that are driving growth. In the frost-free segment, the company grew at nearly 46 per cent, while in the fully automatic washing machine category it grew at about 40 per cent. As far as Korean electronics giants LG and Samsung are concerned, both companies are not only market leaders in most of the high-end categories but are also adding to their portfolio aggressively to capture shares in even those categories, such as notebooks, that they weren’t present in earlier. LG India’s Girish V. Rao, Vice-President (Marketing), says, “GSM mobiles, flat panel displays including LCDs and Plasmas and IT products are the growth drivers for us.

With the kind of technological advancement taking place in the country, it becomes increasingly important for us to take the lead and provide customers with superior products. Sales of flat panel displays have been very encouraging, even though the market is in a very nascent stage.

It is expected to grow manifold. Currently on a small base, it is registering a three-digit growth rate.”

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Top-end tumult