G Amarnath

The post liberalisation entry of transnational majors all over the globe has transformed India’s consumer electronics business during the last few years. in the process, it also has wrecked the comfortable existence of the domestic colour television set manufacturers. With most of them slashing product prices, even as they are forced to hike their advertising budgets. The only way these companies can survive is through selling high volumes combine with cost cutting measures.

The demand for TVs rose with the increasing penetration of satellite/cable TV. The period from 1993 to 1996 saw the CTV industry take off with a bang with a growth of 14 per cent.

In 1996 liquidity crunch in the markets affected the entire consumer durable industry. The Government levies of import duty of 30 per cent on CTVs and other tax elements affected the market. The slowdown is therefore due to the growing number of players in the industry and the resultant fragmentation.

Indian share in the global production of BW sets is expected to rise to 25 per cent and CTVs to five per cent. Indian TV industry’s installed capacity is around 3.5 million CTVs per annum. India still has just 9 CTVs for every 100 households.

The industry is growing in rural areas, where MNCs have no significant presence, where 20 CTV is marketed more. MNC brands are available in premium segment. The entry of MNCs has led to a hotting up of competition in the domestic market for no doubt. The freebies and promotional schemes are more a result of marketer push than consumer pull in TV industry. The industry is also growing via consumer finance. In the coming years, the image of the brand in the consumers mind would be crutial for their survival.

The success of the MNC brands cab be attributed directly to their marketing strategies. They also have advantage of lower interest and inflation rates in their countries; and they are affording to work on lower margins. The battle between brands is basically price and technology. MNC brands came out with strategies such as discounts for new sets in exchange for the old, pagers with every purchase, CTV for just Rupee one, and so on.

Dealers are given indirect incentives and high margins besides the cars and foreign jaunts, since they have the power to influence the decisions of the consumers. MNCs have increased their share of CTV market in less than a year. They have introduced high technologies in their TVs ; and for want of retail outlets, distributors are working out for after sales service in vehicles. They are trying to capture a significant market share before setting a manufacturing base.

Indian players are also attracting consumers with innovative schemes and discounts. They can achieve higher sales by increasing margins. Most companies discuss the additional features offered by their product to improve sales.

Due to replacement demand, the sales have gone up to 2 million TV sets, though profits have declined. The purchase of new CTVs has slowed down and it also affected the BW TV market. In other Asian countries, big size CTVs are moving. In India, 14 CTV is sold more due to low purchasing power and space constraints.

The Indian consumer is having his gala time with more choice of models to chose from, reduced prices of CTVs and improving after sales service, thanks to the increased competition.