With the onset of the lean season as far as air conditioner sales are concerned, LG Electronics is looking at creating a new category within the segment: reversible or heat pump ACs. These are ACs that also work as heaters, so can be marketed as a round-the-year product.
Traditionally, the AC industry sees a 80:20 sales pattern between the first and second half of the year. “We are looking at a 75:25 sales break-up this year and working it up to 65:35 by next year. A year-round product range will help achieve better second-half sales,” said product group head Ajay Bajaj.
While several players like Voltas and Videocon do have reversible ACs, as a category this is almost non-existent.
With small volumes, nobody has invested in building it up so far. The company will set the ball rolling with an ad campaign somewhere in the third week of October to coincide with the festive season.
Though, ACs are not a high-sale festive season item, this will assist in providing the build-up that should begin to see some returns next year, says the company.
According to LG marketing head Salil Kapoor, “The focus at this stage is to educate the consumer and help create an acceptability and mind shift for the product. By January, we should be ready to brand the segment and take it forward aggressively.”
Essentially, a north-centric product, Delhi and Punjab will be big target areas. Priced around 25% higher than its normal models, the reversible ACs will be manufactured at its Noida and Dehradun facilities. Another major focus area for the company this year is split ACs. Splits have been seeing a 42-45% growth in the residential segment. The room AC industry is expected to touch one million units this year, a growth of 15% over last year. Of this, splits are projected to account for 30% of sales.
LG is targeting a 40% growth in AC sales this year, with a projected sale of 4 lakh units (Rs 850 crore in value terms) against 2.8 lakh last year. Of this, splits should account for at least 35% of sales.
In other moves, LG will also from next month begin manufacturing its high-end range of Mirror and Split Art Cool ACs in India.
Currently, these are the only ranges imported. Trial production, which had been on at its Noida facility, has been completed and mass production should begin next month.
As part of its strategy to increase contribution from its high end ‘Whisen’ range, LG also has plans to set up 10 exclusive Whisen showrooms, of which 5-6 should be up by year-end.