‘Consumers are looking for ‘price plus' value options'

The home appliances market has been surprising observers with a strong double digit growth every year over the last two years. Kitchen appliances as well as big-ticket items such LED/LCD televisions have seen strong demand growth. BrandLine spoke to Daizo Ito, President, Panasonic India, to understand what is driving consumer spending and the strategies the company employs to grow its share in the Indian market. Excerpts:

What kind of growth has the consumer business seen in 2010-11 and what are your expectations for the current year?

The consumer electronics segment is one of the strongest revenue contributors. Flat-screen television sets, washing machines, refrigerators, microwaves and air-conditioners are all in high demand, due to multiple reasons. Overall, the consumer durables industry has received a positive response this year.

Panasonic's range of TVs and ACs with their state-of-the-art technology make a major contribution to the sales across the company's entire portfolio. The recently launched Viera Smart TV line-up ranging from 19-inch to 65-inch models customised and developed specifically for the Indian market is drawing much attention due to the increasing number of Web users in India. Amongst the clutter of similar smart TVs, Viera Smart TVs' prices range from Rs 12,900 to Rs 3.49 lakh, a key reason for its rising popularity.

To further expand its market share, Panasonic has and will launch new products that reflect the needs of the local consumers – Viera TVs, Lumix range of cameras, direct-cool refrigerators, Cube ACs with Econavi technology and personal and beauty care products.

In the past, Panasonic has been positioned as a family brand. With the launch of a range of products our intent is to shift the image of Panasonic to one of a youth brand. For instance, the launch of the latest, innovative range of cameras and beauty care products was thought of to target the stylish and tech-savvy new generation of consumers, after observing the purchasing patterns and interests of this segment.

The company will continue to focus on product differentiation for consumers. The consumer response till date has been excellent, not only to the company's new products but also to our green initiatives.

Why is India as a market important to Panasonic? How is it compared to China?

Owing to the vibrant energy and high market potential that the country has, India has been one of the most important countries and potential growth market for Panasonic. We have an ambitious project to significantly increase sales in India. We target closing fiscal 2011-12 with a turnover of Rs 5,500 crore. Panasonic India expects to contribute about 5 per cent of Panasonic's total overseas sales by 2012 and nearly 10 per cent by 2018. We have had 200 per cent growth in the past three years in India, and are confident we will continue with the trend for the next two more years.

While China has been ranked the second-biggest market in the world for consumer electronics, India is witnessing a similar phenomenon with rising consumer consciousness and growing disposable income. And one important factor is that in India the growth is completely driven by domestic consumption unlike China which is export-driven.

What do you think is driving demand in India?

With India surging ahead on its strong growth path we witness a fundamental shift in the consumption and buying behaviour of the ‘core' Indian consuming class. Today, while there is a significant increase in the purchasing power, consumers are looking for ‘value options' which are increasingly becoming ‘price plus'; that is, an option which balances the variables of price, quality, convenience, consistency, innovation and shopping experience. The young generation is severely multi-tasking and for urban teenagers, or those in a small towns, there may be a marginal difference in their degree of preparedness to pay or their awareness levels, but they all have a similar mindset — driven by the desire for success and the need to enjoy that success. In the urban cities and even in small towns, they have been the ‘silent influencers' for some time now, directing family purchases and expenditure.

There is stiff competition to Panasonic in its consumer business in India. How do you plan to handle this?

Panasonic has devised a mid-term strategy for the Indian market. The company aims to target Tier 1, 2 and 3 markets. All the products' marketing and communication strategies are also aligned with this. In Tier 1 markets, primarily products such as large-screen, flat-panel televisions; inverter-based home appliances and digital cameras are promoted. And in the Tier 2 and 3 markets, the range of LCD televisions, direct-cool refrigerators and entry-level home theatre systems are promoted. For instance, Panasonic has already attained leadership position in the Plasma TV segment and the growth story still continues. In the LCD TV segment, we intend to achieve 10 per cent market share by the end of 2011. In split ACs, we are targeting a growth more than 100 per cent over last year.

Panasonic's primary intention is to showcase and communicate technology by way of touch and feel, by showcasing products or newly launched campaigns and enticing the consumers to the nearby stores to experience a wider product display. The “Sound for India” campaign was undertaken for the Viera range 70 cities and reach consumers across the length and breadth of India. A van created a bank of distinctive sounds conceived and produced by consumers, in each of the regions it travelled to. What challenges does India as a market offer to Panasonic?

Although the Indian consumer is evolving, it is still a challenge for a brand to communicate its value over price as the majority of consumers get influenced by the pricing over quality. To counter the challenge, Panasonic in recent times has begun plugging the price gap without compromising on quality aspects. Panasonic has overhauled its retail strategies, unleashed new products in different categories and stepped up advertising and marketing spends and will continue to meet the expectations of a varied class of customers.

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