Videocon, one of the oldest consumer durables firm in the country, is betting big on innovation and high-end features to woo customers rather than just offering lower priced products as it looks to compete with Japanese and Korean giants in the highly competitive segment.
The shift at the homegrown firm is being lead by Akshay Dhoot, who took over as the company’s technology head early last year.
“There is a change in the mindset of the company. We are now more focused on selling more high-end products that command a premium in the market than probable what happened a few years back where we did more R&D to cut costs rather than to build technologically advanced features,” Mr. Dhoot said in an interview.
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The strategy has helped the company, which largely saw demand from tier II and tier III towns, create a market for itself in tier I cities.
Videocon was the first in the world to launch Wi-fi ACs in 2015 that allowed users to access the AC on the go from a smartphone with an Internet connection, Mr. Dhoot said. Earlier this year, Videocon introduced first Satellite AC called Aryabot with advanced IoT (Internet of Things) features, among other products.
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“Products powered by innovation and new technology are changing the dynamics of consumer durable market in India...With these products, we have witnessed a significant shift and an increase in demand coming majorly from the tier 1 market, surpassing the tier 2 and tier 3 markets. There has been an inclination of consumers towards premium products which bring out ease to their lives,” Mr. Dhoot said.
Though, tier 1 markets contribute around one-third of the industry sales, for Videocon, these markets currently contribute around 43 per cent of the revenue. In 2014, this per cent stood at 26 per cent for the company. Further, the average selling price for Videocon products has gone up by 5-10 per cent across different categories as more consumer demand more premium products.
“We have observed that consumers today are looking to spend on products that bring ease and comfort to them. They want to upgrade to newer technologies and aspire for better and latest versions,” Mr Dhoot said.
Videocon is also betting on the upcoming festive season, which generally accounts for about 50 per cent of annual sales, to boost demand.
“We foresee an increasing demand for consumer durables… We plan to launch more than 20 new products across TV, washing machine, air conditioner, and refrigerator segment to boost sales. We will be also announcing an array of offers along with premium launches, this festive season,”
The company is targeting a growth of more than 60 per cent year-on-year in the south and 30 per cent growth in rest of the country. Flat panel displays contribute the most with 38 per cent share to Videocon’s revenue.