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Sub-one ton AC category: marketers search for the right chill

Sub-one ton AC category: marketers search for the right chill

Author | Malini Menon | Tuesday, Jun 21,2005 7:33 AM

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Sub-one ton AC category: marketers search for the right chill

The competition among white goods marketers has been getting as hot as the soaring mercury. And now, with the creation of a new “sub-one ton” air-conditioner segment, most players are speculating whether it has made a significant difference to volumes.

Usha Shriram had opened up this new segment of sub-one ton ACs a few years ago only to be forgotten over time. But this season, this segment is in the news, this time backed by complete research on the consumer mindset. Voltas and Electrolux, which are aggressively marketing the range of sub-one ton ACs, including split ACs, state that “performance in this category have been very encouraging”.

But for LGEIL it’s a question of filling the gap. Ajay Bajaj, Product Group Head, LG air-conditioners, said, “The contribution from this segment has been 1 to1.5 per cent of total sales. Customers are buying them because of the low pricing but are discontented with the performance. Dealers too aren’t very happy. Hence, we are not going bullish about it and avoid selling it. In fact, the reason why we entered the segment was because it was necessary to fill the gap.”

LGEIL had launched 0.75 ton window ACs last month. Bajaj indicated that the 0.75 ton split air-conditioners are in the test marketing phase and expects a national roll-out by September.

Meanwhile, Samsung India has opted not to get into this race. Samsung spokesperson said, “We have no plans to enter the sub-one ton range. We believe that there is a bigger market for the one ton and 1.5 ton models, and so we want to consolidate these segments.”

New entrant Haier of China is also not in favour of entering this category. Ashok Tiwari, VP-Sales and Marketing, Appliances Division, Haier India, said, “The reasoning behind starting this segment has been that customers are looking at upgrading from water coolers to air-conditioners. However, once customers opt for below one ton range, the electricity consumption goes high as the compressor keeps running and the efficiency dips with long usage.”

Asked if Haier has any plans of starting a sub-one ton range, he said, “We are watching this segment carefully. We would think of starting a range only if the consumer research supports the decision and would lead to increase in volumes. It wouldn’t be to fill in the blank space.”

Tiwari pointed out that what Haier would consider more seriously is to bring down the prices of one-ton air-conditioners and price them competitively with the below one ton range. “We are looking at launching a good one-ton model, which would be very competitively priced to the 0.75 ton or 0.8 ton models. The consumer would get a better option then,” he said.

Is this move a threat to those who are pushing the sub-one ton AC models? “Not really,” said K.D. Virmani, General Manager, Voltas, adding, “One of the competitors tried to do this some time back. They brought down the prices of one-ton air-conditioners and the price differential between one-ton and our sub-one ton was just Rs 1,000. However, the strategy didn’t really click.”

Virmani said that their sub-one ton range has done considerably well. “The 0.6 and 0.8 ton window ACs have contributed 22 per cent of the total window air-conditioner sales. In the 0.8 ton split, the contribution to total sales of split air-conditioners has been nearly 8 to 10 per cent,” he said. Virmani attributes the good sales to the right message that was delivered. “We told customers that they would benefit if the application is right. The target group for sub-one ton range is customers who want the cooling effect in a 100 square feet room,” he said.

Electrolux India is also optimistic about the sub-one ton category. On the expectations from the segment, Sanjeev Wadhwa, GM-Sales & Marketing, Electrolux India, said, “The segment will be instrumental in achieving a deeper penetration for AC segment in Indian market, thereby helping us achieve overall volume growth. Average room sizes in Indian households, rising aspirations of consumers and easy availability of finance schemes will provide an impetus to this growing segment.”

Wadhwa said that as a step forward, the company had recently introduced 0.8 ton capacity premium window air-conditioners with remote control, which offers better performance in its category at a very competitive price. “We hope to achieve almost a third of our volumes from the sub-one ton category in the split air-conditioner segment,” he added.

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