Baron - Rewriting Indian Consumer Electronic Goods Marketing

            

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Themes : Innovation
Period : 1994-2002
Organization : Baron
Pub Date : 2001
Countries : India
Industry : Consumer Electronics

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Case Code : MKTG007
Case Length : 7 Pages
Price: Rs. 200;

Baron - Rewriting Indian Consumer Electronic Goods Marketing | Case Study

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The Baron Group Contd...

But there were plans to set up a manufacturing base later on in India. Commenting on the TCL venture, Aiwa sources said TCL was no competition to Aiwa. Also, as TCL was to be handled through a separate joint venture unlike the earlier arrangements, Aiwa believed it could afford to relax. Baron promised that it would not dilute either Aiwa or TCL's equity, as they were targeted at different segments.

While Aiwa was targeted at the top and middle level consumers, TCL targeted the lower end consumers. However, TCL sources said that the company planned to target the middle level consumers as well, in the long run.

Fighting it Out

The 5 million unit, Rs 75 billion CTV market was characterized by cut-throat competition, with over 15 major brands competing fiercely with one another. CTV penetration levels in India were extremely low in the early 1990s. This factor, coupled with the proliferation of satellite channels offering incredible choice by way of software, and the large number of brand and model options available, resulted in a compounded growth rate of nearly 28% for the industry over the decade. Baron, being a late entrant in an already crowded market, in January 1995, believed that it needed innovative thinking and aggressive selling to succeed. At the time, Videocon, Onida and BPL dominated the market, controlling a 75% share amongst them.

Baron also knew that the Akai label alone would not attract buyers because there were a host of other players like Sony and Samsung entering the market at the same time. Besides putting in place a well-developed marketing and distribution network, Baron conducted a careful study of CTV sales, which revealed that of the estimated 1.7 million units that were sold in 1995-96, over one fifth were 'exchange' sales.

Also, a major portion of the sales (1.1 million units) was made to people upgrading from a black-and-white to a color model. Based on these findings, Baron decided to build Akai's brand equity on the basis of exchange schemes and attack every possible segment. Kabir said, "Our targets are the second TV buyer, owners of black-and-white sets who want to go color and those who want to trade up to a bigger model."

Baron's efforts to comprehend the Indian consumer's psyche resulted in identifying the customer's need for attractive consumer durable replacement offers. Baron adopted a combination of '3 products for the price of 1' offers, exchange schemes with huge price-offs and free bundled software to raise the value of the product without charging more for it. The group made the consumers believe that they were striking a good bargain on these high-value products. Baron's exchange schemes were launched with great fanfare all over the country.

Offers of a free cellphone, alone with a connection on its 21" CTV in Hyderabad (April 1997) meant that the effective price of the Rs 23490 TV was about Rs 11000. In other parts of the country, Akai's offers ranged from a Rs 20000 off exchange scheme for a new 29" model to a free 14" CTV with every 21" CTV. Interest free installment schemes with no down payment were offered in association with Countrywide Finance.

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