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David takes battle to goliath’s turf

David takes battle to goliath’s turf

Author | exchange4media News Service | Monday, Aug 30,2004 7:44 AM

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David takes battle to goliath’s turf

There is an interesting scenario emerging in the consumer electronics industry with regional players readying for battle with MNC brands. After silently watching multinational brands target their stronghold—the semi-rural and rural hinterland—regional players are getting ready to hit back by taking the battle into their backyards.

Oscar and Beltek, the stronger players among the regional brands, have drawn up a ‘hitback schedule’. While this mainly banks on targeting the lower end of the metro markets, by offering high-end products like flat CTVs, DVDs and Home Theatre systems at ‘affordable’ prices, Beltek has also finalised plans to enter the white goods segment, with the aim to increase its clout in the bigger markets and help build a stronger ‘brand image.’

There are also moves to chalk out a ‘united strategy’, with talk of common sourcing, expertise sharing, even some kind of ‘common advertising’ to get cost benefits. A consortium for R&D may also be on the cards.

A certain amount of invisible camaraderie has always existed between regional brands, which follow a more or less common pricing pattern, with minor variations. Says Beltek India CEO & vice-president RS Kandhari, ‘‘If regional players could unite on a common platform it would provide cost benefits and increase bargaining power. Players like Weston, Salora, Crown,

T-Series and Beltek are in favour of joining forces.’’ However, others like Texla, Oscar, Bush and Bestavision are keeping away.

According to an industry watcher, ‘‘Such a convergence of interests would benefit all the players to a certain degree. It would also present them a good chance to capture lost ground, since they have lost their two USPs: price and a niche market.’’

Traditionally, while regional players had been operating in the smaller markets on the price plank, the lines had begun to blur with MNCs like LG and Samsung beginning to use cut-throat pricing and their brand equity to muscle into the smaller markets.

‘‘The True flats market has grown from 40,000 units to 1,60,000 a month with prices coming down. While two years back, a 21-inch CTV cost

Rs 18,000, we were priced at Rs 9,990. Now brands like LG are at Rs 9,990 and we are at Rs 7,990. So, with the price gap thinning, the bigger brands are able to exploit their brand equity to lure customers,’’ says Mr Kandhari.

Oscar International Ltd director Arpita Khurana feels that, ‘‘With MNC players entering the value-for-money (VFM) segment, volumes have come at the cost of dwindling margins, which will make it an unsustainable strategy for MNCs in the long run. Samsung, Sony and recently LG have indicated that they want to concentrate on the high-end market.’’

In the meantime, Oscar has planned new strategies to both, retain leadership in the VFM sector as well as prove that it may not be so easy to compete with Oscar’s mass production base and low-cost financial model. Oscar is also an OEM for several brands, including LG (for DVDs).

Says Ms Khurana, ‘‘Oscar is aiming at taking the premium tag out of the home theatre systems, as we did with DVDs by offering the product at a much lower price.’’ It is offering a DVD with a 5.1 system at a price of Rs 4,990. Beltek is also ready to launch a 21 inch CTV plus DVD at Rs 9,990. Its DVDs are priced at Rs 3,490 and Rs 3,190 against the bigger brands’ price of Rs 5,990 and Rs 4,990.

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