As the Rs 25,000-crore (Rs 250-billion) consumer durables industry has done away with price cuts this year, companies are providing consumers with a new hook -- value-added offers.
In this festive season, Samsung is offering a Tata Sky DTH connection with its 30- and 32-inch LCD and plasma range. According to a company spokesperson, "This is a pan-India initiative and there are more offers coming up before Diwali."
The company is also planning to give a lot more consumer finance options along with the value additions. For the Durga Puja in West Bengal, TCL India is offering a chance to win a trip to China to customers in the eastern part of India.
Industry experts believe that the price discounts will not work this time. According to V Ramachandran, director, sales and marketing, LG Electronics, "Consumers attitudes are shifting. Price is no longer a major driving force. Today brand name and performance matter."
Another reason the industry cannot afford price cuts is because average price points have been consistently falling. For instance, two years ago a 42-inch plasma would have cost Rs 2-2.5 lakh, but it now costs Rs 55,000 to Rs 80,000. "Prices have reduced almost more than half," said a source. Factors like these have led to a pressure on margins.
According to Vivek Sharma, vice president, sales and marketing, MIRC Electronics, the manufacturer of Onida brand, "The companies cannot afford price cuts because margins are under pressure and the premium products have to move. Value-added products are the trend. So there are going to be offers like extended warranty, a cookery book with a microwave oven or additional services on DVD players."
Ajit Joshi, CEO, Croma, believes that it's a win-win situation for the dealers, consumers and companies. "These offers club the products, so a consumer gets a bundle of products. It is better for the customer and it helps the companies in selling their products."
