VP-Marketing | 07 Aug 2002
"Below-the-line activity like product demonstrations and cooking classes etc are certainly important for product categories like microwave ovens where there is still a fair degree of concept selling happening"
Consumer Durable category has seen some keen marketing warfare. LG, Samsung, Whirlpool all fighting for the share of mind, and moolah, of Indian housewife. In this edition of Brand Speak, we speak with M B Lee, VP-Marketing, Samsung India and learn how Samsung has adapted to Indian marketing environment and come right on top.
Q. Samsung is a recent entrant in Indian market. How has been the experience?
Samsung has made very rapid strides in the Indian Market in a span of six Years. In the area of Consumer Electronics, we have emerged as a leader among multinational CTV brands and one of the 'Top 3' CTV brands in the country. The emphasis in on localization of products and other elements. While our CTV Manufacturing facility at Noida has enabled us to give a faster response to Indian customers, our CTV R&D Centre has allowed us to provide products tailored to suit the requirements of Indian customers in terms of features. This Year, we are in the process of consolidating this business by setting up manufacturing operations for Home Appliance products. In February 2002, we commenced the domestic manufacturing of Air conditioners, while we commenced washing machine production in November 2001. So the experience has been very good.
Q. What is you differentiator against? Many companies know Indian consumers so much longer...
Well, the key differentiator as far as Samsung Products are concerned is the product technology, features and the superior product quality . To give an example, the Samsung 'Plano' flat television range comes with the 'DynaFlat' technology, which ensures perfectly flat images, and remarkable colour purity. Samsung Microwave ovens come with a Bio Ceramic Enamel cavity, which is a Samsung patented technology worldwide and likewise in all the categories, we are trying to provide unique features that differentiate our products from competition.
Q. What is the extent of your marketing activity? Do you rely heavily on below-the-line support?
Our total advertising budget for this Year is Rs.85 Crores. In overall terms, our print and television media mix is roughly 50:50. Below-the-line activity like product demonstrations and cooking classes etc are certainly important for product categories like microwave ovens where there is still a fair degree of concept selling happening .For washing machines too, product demonstrations are important
Q. Why, in the past few years, has promotion become such an important part of the marketing mix? Is it because advertising is not as effective as it used to be?
I consider promotions as an effective marketing tool and use them in that manner .We had very successfully used the 'Phod ke Dekho' Promotion during Festival time last year and it had yielded rich dividends for the Company. It helped stimulate sales in a market, which was very dull last year. And I think it was a combination of the Offer and the advertising per-se that worked very well last year .We had Rs.10 Crores of freebies for consumers and Rs.5 Crores of advertising for the 'Phod ke Dekho' Campaign which gave us sales worth Rs.275 Crores during the period of the Promotion. This Year, we had launched the "Dabaake Jeeto" offer to optimize sales during the Soccer Season.
Q. Samsung has had to compete with established Indian players both in the Consumer durables and white goods category. In the span of 6 years you have been able to carve a niche out for yourself. What has been the strategy behind this achievement? Has the company met with the objectives it set out to achieve before coming to India?
I think one of the main reasons for our success has been the fact that we have tried to meet the expectations of our Indian customers in all respects, whether it has been in terms of the product features, after sales service, product quality or how contemporary is the product that we are offering to the Indian consumer. We have not only brought in the latest technology products for the Indian consumers, but have worked on customizing the range to better suit their needs. And it is this focus on the Indian Customer and the endeavor to satisfy his/her needs that has helped the Company. To give you an example in terms of our after sales service; Samsung India has made its entire Spares and Service management web based with the implementation of Servicenet, its unique B to B initiative. While at the customer end, Samsung customers can log on to the samsungindia website for registering their calls and are given a unique call reference number for tracking their call; for the Authorized Service Center (ASC) which gets the Call, it translates into accurate customer call data. Making it easier for the ASC to process customer calls.
Q. Apart from Indian players a host of MNCs including Korean companies have been aggressive in the Indian market. How different is competing with other Korean players in other markets across the globe vis-Ã -vis competing with them in India? What opportunities and problems does the Indian market present?
Samsung is a Global Company and most of the MNC brands that we are competing in India are the ones that we are competing with globally. However, the situation in the market is different by country and in each country we have to tailor make our marketing strategy as per the requirements of that market. The biggest advantage that India presents is linked with its size and the fact that penetration levels in the country are very low for products like CTVs, refrigerators, washing machines etc. The penetration level for CTVs is 18.3%, while that of washing machines is a mere 5.8%. Thus, this market presents a tremendous opportunity for us to market our products. However, if I compare the price levels in India with those in China, the same products are relatively more expensive due to the existing duty structure and tax levels in India .The Government in this Year's Budget has shown a blueprint in terms of import duty reduction in a couple of years and I feel these initiatives will go a long way.
Q. The consumer electronics category generally witnesses a demand surge during festival time or special sporting events like the world Cup. During the rest of the time what is your view on advertising? How do you utilize advertising during such lean periods?
Yes, there is demand surge during festival time but it does not imply that the sales in the rest of the year go lean for this industry. Last year, in any case was a period of slowdown on account of multiple factors, which are well known. So the impact of the Festival buying was more dramatic. Product advertising and brand building activities are carried out throughout the year because it is finally the Brand Pull and Brand Equity that help you sustain your position in the market. Promotions that are carried out by Consumer Durable Companies during Festival time or during events, help in stimulating sales for a short period and are carried out for achieving short-term volume targets