Panasonic woos the Indian market

Daizo Ito, Panasonic India's Chief Executive is not unduly perturbed by the blistering 44 degree Delhi heat. As we enter the business centre at a star hotel, he questions one on the brand of air-conditioner being used at home.

As one involuntarily rattles off a Korean brand name, he earnestly urges one to try out the new model from the Panasonic stable that has been developed completely with Indian consumer insights.

Since April 2010, when Ito took charge of the Indian operations of Panasonic, his prime concern has been to convert the Japanese brand into a household name.

In the Rs 26,000-crore durables market monopolised by the Korean behemoths, the Japanese company wants to enhance competition and reclaim Panasonic's brand equity.

“We are the No.1 or 2 brand in most Asian countries,” he avers, “but in India our brand awareness compared to our rivals even till about four years ago was rock-bottom. But now India is a high ground of opportunities.”

The parent company, known for its technology, has, instead, been focusing on China as its growth driver. The result has been stark. China contributes nearly 8 per cent to its global turnover, while India contributes only 3-4 per cent.

But Ito says this will change in the coming years. “We are committed to our growth in India. The vision for Panasonic is to grow the business here and by 2018, the 100{+t}{+h} year of our founding, we hope this will go up to 10 per cent. We are building a rational brand and investing in research and technology and even customising for the Indian market,” he says.

On the turnover front, he says, “We expect Panasonic India's turnover to be Rs 5,500 crore in 2010-11 and we are on track to reach the Rs 9,000-crore mark by 2012. This next phase of growth will be a time of learning and understanding consumer behaviour,” he added.

Take a look at the new cube split air-conditioner. Ito says the product was developed completely with Indian consumer insights.

“Our R&D team from Malaysia had visited consumer homes and came to the conclusion that window ACs are noisy; besides, such ACs block the light coming in through the window. We, therefore, customised a product to marry need with desire,” Ito says. Indian consumers are still price- and value-conscious, but want technologically superior products.

“The cube split AC was developed after understanding exactly what Indian buyers were looking for. A complete shift from the earlier strategy where products developed in other markets were retailed in other parts of the world as well.”

Ito notes that the company has got a head-start with certain products. LCDs, refrigerators and air-conditioners will continue to be a focus area. And it is not just the bigger appliances and durables that the company is eyeing. It is concentrating on smaller appliances in beauty care as also car batteries and water purifiers.

“The expectations of the Indian market are changing rapidly. Income, education and information have contributed to this growth. The demand for electronics is growing and penetration is also rising steadily,” Ito says, adding GenNext consumers were willing to pay a premium for technology and features such as energy efficiency.

According to industry watchers, Panasonic's reinvention of the brand with younger brand icons and trendy and technologically advanced products has stood it in good stead. Its branding and marketing campaigns are in tune with the youth. However, in terms of distribution and service, the company still needs to catch up with its competitors, they say.

Francis Xavier, Managing Director, Francis Kanoi Marketing Planning Service, says: “Panasonic's presence in the durables business is still small. Despite being one of the first MNCs, it did not play its cards well and the Koreans walked away with a large chunk of the market share.” He says a lot needs to be done about the distribution and service. “Competition in the durables market is tough as every category has a market leader. Panasonic will have to identify a winning product.”

Investing in India

The Japanese brand has also set up its first R&D subsidiary in India, the Panasonic Research & Development Center India (PRDCI) in Gurgaon.

The PRDCI starts its activities in line with Panasonic's plans to make India a hub for the development of products that will contribute to the future Indian market and help realise a green innovation for a sustainable society. Established as Panasonic's ninth R&D centre in the emerging countries, following China and Vietnam, PRDCI is expected to expand its operational scale in India.

Apart from this, the company says it has also topped its branding campaigns with a Rs 600-crore marketing blitz with a host of celebrity brand ambassadors, including Ranbir Kapoor, Dia Mirza and Katrina Kaif.

“In India, both cricket and Bollywood are deeply rooted in consumers' psyche. Therefore, we had to have these two elements in our branding campaigns to attract eyeballs,” he says.

Also, the company says it is scaling up its distribution to be present where the consumer demands. A lot of thrust is being put on its own sales outlets, which number 111. Also, sales through modern retail are rising steadily, though traditional channels still rule the roost in India.

“Japan was like India 20 years ago. But now, it is the supermarkets which dominate the retail experience and sales channel,” he notes.

Ask Ito about reports on Panasonic Corp announcing 35,000 jobs cuts globally as a part of its restructuring exercise and its possible impact on the domestic market, and he says, “There will be no impact of the global job cut on the Indian market as it is a high-growth market for us. On the contrary, we are looking to hire about 3,000-4,000 odd people.”

The durables and appliances firm is setting up a manufacturing facility for air-conditioners, welding equipment and washing machines in Jhajjar in Haryana. It will be operational by 2012.

“A large chunk of the headcount will be added to the new facility,” he added. Currently, the company has about 12,000 people on its rolls. “We had 10,500 employees in 2010, including all our operations in India. We will have 12,650 employees by the end of 2011 and 16,500 employees by 2012,” Ito says.

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