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Domestic brands back with a bang

Domestic brands back with a bang

Author | exchange4media News Service | Thursday, Oct 03,2002 7:08 AM

Domestic brands back with a bang

Even though the CTV industry has seen good growth this year, it is the action in the so-called semi-urban/rural areas that has caught the fancy of various players. Over the past two years, almost forgotten big domestic television players of yesterday, the likes of Oscar, Beltek, Weston and Salora, have been making big strides in the CTV segment in semi-urban/rural areas.

And with over 50 per cent of total CTV sales in the country coming from these areas, the players collectively have been able to garner a good market share in a short period of time.

And this trend is not visible in CTVs alone. In the VCD players segment, these companies have not only been able to offset MNC competition, but have also been able to corner a significant portion of the grey market.

And so far most of the growth has come from the 14-inch CTV segment, as people tend to `upgrade' to the cheapest available option in these areas. Also, the price difference between a B&W TV and CTV has narrowed down.

According to industry estimates, the 14-inch segment alone is growing by about 30 per cent from about 1.25 million last year to 1.5-1.6 million (expected) this year. Apart from high demand, another factor helping growth in the segment has been the availability of picture tubes. CTV picture tube manufacturer LG Hotline recently (in August) started manufacturing the 14-inch tube, prior to which Samtel was the only manufacturer in the country. The period between April and June this year saw a shortage of 14-inch CTVs as demand grew. The smaller regional brands have benefited from this.

Meanwhile, the growth for the smaller companies has also been triggered by the low pricing of products being offered by the players, with a 14-inch television available for as low as Rs 5,000. A similar product from one of the larger players would be available for no less than Rs 8,000. The smaller players have been able to get the price advantage by outsourcing components from countries like South Korea, China and Japan. Beltek, for instance, sources its components from all three countries. Oscar International has a tie-up with Sony Japan for some of its components.

Further, these companies operate on smaller margins and are looking at generating volumes to increase profits. While a bigger player needs to keep a margin of almost Rs 5,000 to survive in the market, these companies keep a margin of about Rs 800 per CTV. They are able to do this because their overhead costs are low and they keep their marketing expenditure to the bare minimum. Apart from this, they do not face a logistics problem, thus saving on transportation costs.

According to industry sources, another reason is that many of these players also enjoy certain tax exemptions.

Companies such as LG, Samsung and Philips are sprucing up their strategies in the rural areas and are increasing their offerings in the economy range. Samsung too offers about three 14" models and one 20" model in the Rs 10,000 bracket and will be expanding its range next year in the 14", 20" and 21" screen size categories.

For Samsung, last year the contribution of markets having population size below one million was around 30 per cent of the company's total CTV sales. This year, the percentage contribution of these markets (sub one million population size) is likely to grow to 35-40 per cent of the total CTV volume of the company this year.

Philips too launched a high-decibel marketing initiative called the Mahasangram to increase sales in rural areas.

The smaller players, though, claim that this will not affect them in the long run as "bigger players will require higher margins to maintain profitability" in this segment. Recently, on the lines of companies selling durables on credit in urban areas through tie-ups with finance companies, the smaller players too have started selling CTVs and VCD players on credit by getting their dealers to give loans.

Furthermore, instead of merely remaining regional players, these companies are now rapidly entering markets across the country. A special focus has been on the Southern markets, which tend to be more brand conscious," says an industry analyst.

Beltek, for instance, claims it is now present in almost all the markets, with the exception of West Bengal and Maharashtra. The company has entered the Southern market very recently.

Further, these companies are shedding their complacence and are actively focusing on bringing new, premium products into the market at a very competitive price. On the anvil are products such as DVD players, 29-inch flat CTVs, theatre systems and so on. Weston, for instance, recently launched a range of competitively priced flat screen televisions in the market.

And the numbers tell the story. Oscar, for instance, is targeting to sell around three lakh CTVs this year, up from the two lakh sold last year. Beltek too is is planning to sell 2.75 lakh CTVs in the current year— a growth of 75,000 units from last year.

But in the long run, it is the quality of products and the service, which will eventually decide whether these players actually become a success story or not.

Tags: e4m

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