How has Whirlpool performed this year?

We have launched some new products and they have done pretty well. About sales, I can say that we’ve done some conscious down-stocking. We had some excess inventories and we have reduced our inventory by 1,25,000 units in the market. So frankly, sales haven’t been too strong but in terms of secondary sales, things are looking up.

Whirlpool is most often associated with washing machines and refrigerators. Given such an image, how are you pushing the other two categories –microwaves and airconditioners?

First of all, here I want to talk about Whirlpool’s positioning. The positioning has been ‘You and Whirlpool—the world’s best homemaker’. We believe that we have done a great job of establishing that the housewife is a great homemaker through the protagonist in our commercials and our marketing programmes. Where we need to improve ourselves in going forward is establishing Whirlpool as the world’s best homemaker because that is an integral part of our positioning but we don’t own that as yet. So, in order to own that, we realised that we need to establish Whirlpool as a specialist in appliances because a specialist is perceived as more competent, more credible, more skilful and more knowledgeable. Hence, we preferred to be a specialist rather than a generalist, which our competitors are trying to be. In fact, it’s like saying we want to be a heart specialist rather than a general practitioner of medicine.

Therefore, if we have to establish ourselves as a specialist, we have to go beyond being a refrigerator and washing machine company. We have to look at microwaves, airconditioners and other opportunities in future. This is our strategy and these categories are doing well. Airconditioners have grown by 18-19 per cent this year, microwaves have grown by 25 per cent. This is the kind of growth that is happening in these two categories and we want to be a part of this growth. So our aspiration is to be among the top three players in the next few months. We are looking at some new products in microwaves and filling all our portfolio gaps and driving sales very aggressively.

Could you please tell me more of the new promotional activities that are lined up?

We have a mother brand campaign that for the first time showcases the entire range of Whirlpool products. It showcases all categories – from refrigerators to microwaves. This would be one way to build awareness about the fact that we have a whole range of products. Secondly, we are looking at doing demonstrations in a big way for our washing machines and microwaves because we want to make our consumers realise that we have some superior benefits and features in our products. For instance, in the case of washing machines, our machines can remove nine different types of stains. We had a model in the top-load called ‘Stainwash’ that could remove six stains. None of the competitors’ models can remove a single stain. Our new model helps you regain the original whiteness of clothes that have turned yellow. These things have to be demonstrated. So that is a big change in our marketing plan.

How have the front-load washing machines been doing in comparison to top-load?

We have a very small presence in the front-load segment. The new range, Sensation, is therefore targeted at those who prefer front-load washers. We have the Whitemagic range of washers that are available in the top-load segment.

What is the ‘sixth sense technology’ that you have been talking about?

I will go back to what we want to achieve, which is ‘you and Whirlpool—the world’s best homemaker’. Now, we believe that we didn’t want to talk about technology in an alienating and cold manner. It has to connect with the consumer. Whirlpool is a warm and caring brand. Sometimes when you get to talk about technology, you become very cold and become very distant from the consumer. So we were struggling to come up with an idea by which we could be appliance specialists and at the same time do it with a passion which is consistent with Whirlpool values.

Nearly eight to nine months ago we came up with this wonderful idea called ‘sixth sense’, which we define as a woman’s intuition captured by technology. So, we say Whirlpool appliances that have ‘sixth sense’ can proactively understand the needs of the consumer. And they are so advanced that they can sense what a woman wants, why she wants it, how she wants it and when she wants it. Therefore, because of the ‘sixth sense’ we can offer best in class performance. In refrigerators, you can offer best in class cooling. Our advertisements in fact point out that no matter how many times you open the fridge door, the ‘sixth sense’ will increase the airflow in specific areas which require more cooling. In washing machines, we say that six different types of stains can be removed because of our ‘sixth sense technology’ that is as effective as dry cleaning. The washing machine can zero in on a stain depending on the intensity and accordingly treat it.

‘Sixth sense’ is therefore an integral part of our promise of going forward. It is not a feature, it is a bigger thought, which is that women have intuition and so do our appliances. Therefore, we can anticipate the needs of a homemaker better than anybody else. Even our Diwali promotion is based on this: ‘Apni sixth sense azmao aur Lakshmi ghar lao.’

What is the target that you have set for the festival season?

For Diwali, we have talked about 15-20 per cent growth in sales this year.

Why don’t we see campaigns focused on airconditioners and microwaves?

We have started our brand campaign in multiplexes and theatres in Mumbai and Delhi. As I mentioned earlier, this campaign talks about the entire product range. The campaign started a couple of weeks ago.

Why Delhi and Mumbai? Why multiplexes? The answer is very simple. The penetration of air conditioners and microwaves is less than one per cent even in urban areas. In washing machines, the penetration is about eight to nine per cent. In refrigerators, our focus is on the frost-free category. So, the people who will buy airconditioners, fully automatic washing machines, microwaves and refrigerators are the ones who visit theatres and multiplexes. And currently, the two big markets we want to penetrate are Mumbai and Delhi. This is how we have earmarked our spending. If we spend on a TVC, it will require a lot of money because it is a 60-second film. So we decided to spend our money smartly by spending it on theatres and multiplexes.

Your competitors have been successful by reaching out to the B towns. Why aren’t you doing the same?

I agree with you but you also have to look at the resources that are available. Our competitors are spending seven-eight times more money than us. We measure two very important things in the industry. One is consideration, and the other is preference. By consideration, we mean if one needs to buy a home appliance, what are the brands he will consider. It will be two or three brands. Preference is that one brand that I have decided to buy after doing all my enquiries. So these are very strong measures for brands. Now, our research shows that consumers have a high consideration for Whirlpool in comparison to competitors in refrigerators and washing machines. Preference-wise LG and we are at par and we are far ahead of Samsung. In washing machines, though we are No. 2, LG being the leader in this category, our preference is much higher.

Now, we want to capitalise on this. The reason for their market share being higher than us despite the fact that preference-wise we are leading is because of our distribution weakness. Our distribution is weaker than theirs, that is why we have made a lot of investment this year to improve our distribution network, cleaning our inventories, settling old claims. Secondly, we had some product portfolio gaps, like if I prefer a Whirlpool front-loading washing machine and if there aren’t right models, then I go and take what is available. So what we are doing is introducing a bigger range of products to fill the portfolio gaps and at the same time strengthen our distribution network. This is how we intend to translate the high preference to a high market share.

The other thing is that Whirlpool figures under Superbrands, our competitors don’t figure in the list. LG is not a Superbrand for any category; Samsung got it only for mobile phones. We have got it for refrigerators and washing machines

In microwaves, you have priced the solo variant pretty high. Your competitors are marketing the same product at a far lower price. What is the rationale behind this?

Our products are superior. Our products in every category are significantly better than competition. I honestly believe that these are new categories that require education and demonstration and not advertising. So what we have done is come up with large-scale demonstrations for our washing machines and microwaves so that we can justify the premium pricing to our consumers. We do not want to be a price fighter. For Whirlpool, our strategy is to charge two to three per cent premium, which is minimum in comparison to our competitors. We don’t want to discount our brand. We are a premium brand and we want to charge for the high quality and performance that we are delivering to our consumers.

The other thing that we are doing – this is subtle but is working now for every brand -- is a sticker attached to every product of ours that says ‘America’s No. 1 home appliances company’. One of the reasons for the preference going up is that. This is so because Indians know that American technology is far better than any Asian technology and at the same time it has raised the question of origin of our competitors. We don’t believe in spending so much money like the Koreans who spend six to seven times more than us. However, the preference is still high for us. It is very easy to build a brand with Rs 200 crore to Rs 250 crore of advertising money, but when you have limited resources it is the real test of your marketing prowess.

For instance, in print, our competitors are spending far more than us. We have been spending the money smartly. Instead of giving ads every day, we are skewing our ads towards weekends when our customers go to shops and make enquiries. Our ads are coming on days such as Dussehra, Karva Chowth, Dhanteras, etc. Also, we have done some smart negotiations with the major dailies and magazines by taking a twelve-month contract and blocking the primary positions—front page or back page. So we deal with competitors with greater muscle power in terms of money through smart buying and smarter planning. We have been constant with our brand message. If you change the personality and values of the brand, then it confuses the consumer. So another hallmark of Whirlpool has been consistency of brand message. So, through ‘sixth sense’ we have addressed the areas where we were not that strong. For instance, people had not seen Whirlpool as an international brand and we were considered slightly lower in technology; so we have addressed these areas through ‘sixth sense’. Whirlpool also conducted the women’s’ award which was also in line with our brand building strategy.

What is the kind of indigenisation that you have done?

We have three factories in India. Refrigerators and washing machines are completely made in India. We are sourcing split ACs from China and outsourced window ACs to a manufacturer in Hyderabad. Next year, we are looking at a different manufacturing strategy for ACs that will be cost-competitive. If we need to get into this business aggressively, we need to look at our overall cost structure, quality, reliability of supply, etc. We are outsourcing microwaves from China.

There was a news that your shareholders were angry because they weren’t getting the dividends. How are coping with this?

I don’t wish to get into any financial discussion but clearly we want to create value and our strategy consistently uses the line ‘consumer focussed brand value creation’. It’s not like we want to merely put in money behind the brand. We want to be a profitable company. Globally, we are a profitable company. What has happened is that we have deliberately reduced our inventory by 1,25,000 units, which is a big number. It is a one-time correction that we have done. Secondly, everybody is facing the heat because costs have gone up of steel, plastic, etc., and the industry pricing has been coming down. However, we want to break out of this vicious cycle by introducing price increases on all of our products and, secondly, we have come up with very differentiated products because of which we can command even a 10 per cent premium.

Considering that LG has already penetrated the country with their microwaves, what will your strategy be?

See, we are not wary of our competitors. Look at the penetration; the number of people who use a microwave is 0.1 per cent, so the challenge is how do I make more people use a microwave. If I can do that I don’t need to worry about competition. There is potential for huge growth in microwaves. It’s the same case for airconditioners too. The good thing about India is that the penetration level is very low for appliances. So you really don’t have to worry about the competitors. Yes, you need to keep an eye on them but that is just to ensure that your product offerings are far superior to theirs.

What is your market share in each of the categories?

In refrigerators, it is around 22 per cent and washing machines we are around 15 per cent. For airconditioners and microwaves, it isn’t significant. Our competitors have a strategy of keeping the pricing rock bottom and pick up huge volumes. We don’t believe in lowering the price to increase volumes.