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LGEIL to expand air conditioner portfolio

15-July-2005
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LGEIL to expand air conditioner portfolio

The summer months may be over, but that doesn’t mean the season for air conditioners is. This is the vision with which consumer electronics LGEIL is planning to reach its target of Rs 1,000 crore for air conditioners by year-end.

Ajay Bajaj, LG’s Product Group Head, Air Conditioners, said, “The company is moving away from the belief that the sales for air conditioners are limited to summer months. Our attempt is to market the air conditioners throughout the year and change the consumer’s mindset from it being just a cooling device. We are marketing it as a device that cools in summers, controls humidity in monsoons and warms you in winters.”

Bajaj claimed that this attempt was to ease pressure on them. “If the sales are concentrated during a few months only, then the whole infrastructure is under pressure, which is why we plan to even it out,” he added.

The company had performed well between January and June this year, claimed Bajaj. On the performance, he said, “We have made Rs 650 crore between January and June. The H1 to H2 ratio last year was 72:28, this year it will be 65:35. Next year, we plan to make it 50:50,” he said.

As of now, the air conditioner business contributes 15 per cent of the total sales. Bajaj further said that sales from window and split ACs had contributed equally to the total sales.

The company was making a gradual shift from its positioning of “value-for-money” to “money for value”, informed Bajaj. “We have kept the prices slightly higher than the competitors because of the additional value that we are providing to the consumers. Moreover, the company has decided this strategic move as we believe that customers should be ready to pay for that added value being given,” he explained.

A couple of launches are also lined up in this category. The 0.75 tonne split air conditioner will be launched by September-end. The product has undergone the test market phase in Maharashtra and Kerala and will go through a nationwide launch during this time.

In January 2006, the company plans to launch a 2.5 tonne high capacity split air conditioner. “The objective is to expand the portfolio and provide a range (0.75 tonne to 2.5 tonne) to the customer. As of now in split ACs, only 2 tonne is available in the market,” he said.

Carrying forward the “money for value” proposition, the company is pricing the products slightly higher than the competitors. “While the competitors are selling the sub-one tonne at Rs 10,000 in window ACs, we are selling it at Rs11,000. Similarly, sub-one tonne split ACs, which are being sold by competitors at Rs 15,000, we are planning to launch it at a price of Rs 16,000,” he elaborated.

Asked on the sales of air conditioners at www.lgezybuy.com, Bajaj said, “As of now, it is insignificant. However, we do have plans to focus on it now. During the peak season, our concentration was more on the retail segment, but now we will be looking at unconventional forms of selling like www.lgezybuy.com, strategic tie-ups with portals like www.Indiatimes.com, corporate sales, etc.”

Asked about the sales of commercial air conditioners, he said, “This year, we’ve had sales worth Rs 160 crore, and what we are aiming to achieve next year is Rs 250 crore.” The total air conditioner business for LGEIL would contribute around Rs 1,500 crore next year, he claimed.

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