LG India plans to introduce lower price points for categories such as vacuum cleaners and water purifiers where it has yet to garner significant market share compared to the rest of its home appliance categories. The company will re-work its pricing strategy to further segment its offerings in these two categories.
Refocus
Y. V. Verma, Director, Home Appliances, LG India, said, “We have decided to re-focus on categories such as vacuum cleaners and water purifiers with more models and price points to make the products available across all segments like the rest of our categories. Currently, vacuum cleaners are priced too high and are positioned at the top end of the segment.” The top end models of LG vacuum cleaners and water purifiers are currently priced between Rs 25,000 and Rs 35,000.
“Since we entered these categories at very high price points at the premium end of the category, we now have to take a call on these price segments. While we have to fight to be a premium player, we are slowly making our products available across different price segments,” added Verma.
LG India has been forced to raise prices for refrigerators and air conditioners in the recent past. “We have increased prices by 15-18 per cent in the past one and half years due to raw material costs and forex losses due to the fall of the rupee. Prices have been increased for the imported models in categories such as refrigerators,” said Verma.
Increasing competition in the consumer durables category with the constant influx of new players has made it difficult for existing players to retain their leadership position. LG India has maintained its dominant position in categories such as washing machines, refrigerators and microwaves. “There is huge competition and being a market leader in three categories, it is not easy to maintain shares when prices are also increased. At best it would be possible to increase share by 1 or 2 per cent in the home appliance category,” said Verma. With both washing machines and refrigerators growing at 18-20 per cent, LG India is also enhancing its ad spends behind these categories. “Unlike ACs which are seasonal in nature, the refrigerator category grows throughout the year and peaks several times during festivals and marriages. We have earmarked an ad spend of Rs 30 crore on the ever-cool series of air conditioners for the year,” added Verma.
Market share
According to market research firm ORG GFK, LG India has a 37 per cent share in the home appliances category which comprises washing machines, refrigerators and microwaves. Home appliances contributes 50 per cent to LG India’s top line, which is at Rs 17,000 crore.