The company's attempt to cash in on the football fever is expected to help it achieve a turnover of Rs 1520 crore in the calendar year, compared with last year's Rs 1350 crore. The company posted a turnover of Rs 281 crore during the first quarter.

SIEL's plans for the current year involves increasing market penetration through a series of launches and forays into the semi-urban and mass markets. Christened “Dabaake Jeeto Offer”, the Samsung initiative would be launched in Kolkata on May 1 and thereafter elsewhere in the country. This follows Philips India's already launched promotion to cash on the expected surge in CTV sales during the soccer world cup.

SIEL's similar offer, “Phodke Dekho”, which was launched before Diwali, had collected Rs 275 crore, the highest ever sum raised by a company through CTV sale in one promotion. During the duration of the promotion, every consumer purchasing Samsung consumer electronics or home appliance products will get an alarm clock. The clock comes packed in a plastic football along with a tamper –proof anodized sticker. The customer wins the gift etched on the sticker. The promotion will cost the company close to Rs 25 crore.

Zutshi said SIEL aims to be among the top three CTV sellers in the country this year, from its current ranking of fourth. The company hopes to grab the number one slot in three years.

The company, which commands a 11 per cent share in the domestic CTV market, has recently introduced its “Plano” range of advanced digital flat CTVs, comprising eight models and two projection televisions. In the home appliance business, the company was targeting sales of Rs 688 crore during 2002, which would account for about 44 per cent of the total turnover.

The company has commenced the domestic production of fully automatic washing machines in November, 2001 and the production of window air conditioners at its Noida Facility in February, 2002.

----- Business Standard

Indian consumers have always associated videocon with consumer durables like colour televisions (CTVs), washing machines, refrigerators and music systems. But venugopal Dhoot, managing director of the Rs 3,244 - crore Videocon international wants to change that. “Out main business is not consumer durables, “ he says “It’s glass shell manufacturing from where the real profits come.”

Today, the company claims that glass shells, which go into TV screens, account for 75 per cent of the Rs 443.83 - crore profit that video con notched up in 2000 -01.

This regression - from being a branded player to a commodity supplier - is testimony to the effect having that multinational competition is having on established national is having on established national players like Videocon. Businesses like the glass shell division, for capacity of three million units, get operating profit margins in the range of 150 per cent. In contrast, the durables business gets players like videocon a margin of 5 per cent.

Dhoot accepts that increasing competition and decreasing margins in durables are reasons for the company’s shift in focus. But it’s not a lose-lose situation for the company. Competitors say videocon is doing a clever balancing act by cross - subsidising its durables business with the profits from the glass shell division.

Is it? Certainly, even as the company’s net sales have grown from Rs 857.6 crore in 1993-94 to Rs. 3,076 core in 2000-01 operating profit margins (OPM) have shrunk. After increasing from 9.76 per cent in 1993 - 94 to high of 16.49 per cent in 1997 - 98, OPM stood at 13.93 per cent in 2000 - 01 its lowest in the last four years.

Consider first the pressures that prompted this change of strategy for Videocon. Till the mid-nineties, dominance was a factor that consumer durables major videocon International could almost take for granted. . High-decibel advertising and an aggressive pricing strategy helped the company carve itself leadership in a range of categories like CTVs and washing machines.

But as the multinationals the Korean LG and Samsung, the Japanese Sony and National Pana Sonic and others like whirlpool, Thomson, etc - started attacking the Indian market, the might of home - grown players like Videocon was challenged.

Videocon’s market share in the 5.4 million - unit CTV segment - which accounts for half videocon’s turnover at 10.7 per cent (January to December 2001), si far below the market share of nearly 24 per cent that videocon controlled in the mid - nineties.

To be fair, competition in the segment has increased for three major Indian player (BPL, Onida and Videocon) in the past, to nearly 15 will - known national and international brands today.

But the point is Videocon has not been able to keep pace with growth. While it sold roughly 3.24 lakh sets in 1994 - 1995 and managed to sell only 5.77 lakh television sets in calendar 2001, While the industry grew at a compounded annual growth rate (CAGR) of 21.90 per cent from 1994-95 to December 2001, Videcon managed a CAGR of just 8.59 per cent. In comparison, other Indian players like BPL and Onida grew at a CAGR of 18.89 and 13.66 per cent respectively.

The scene is similar in other product categories in which videocon had a significant presence. Take washing machines. Videocon was a flag - bearer for the category, being among the first to launch in 1986. By `1994 - 95 Videocon had cornered half the 5.5 lakh - unit market with Bangalore-based BPL a distant second with a 20 per cent share.

Estimates by TV Veopar Journal in 2000 -01 show that Videcon’s share has dropped to 28.3 per cent, while a new entrant like LG is moving close with a market share of 16.5 per cent in a segment that has touched 13.4 lakh units.

Today, large dealera in Mumbai do not even stock the brand in their showrooms, though the counter sales person assures you that he can get the brand for customers who insist on Videocon.

B.A Srinivasa, director, Vivek Limited a Chennai based dealer of consumer durables, says, “Of late the Videocon brand has become a reactive brand and is more of a market follower. The delay in upgrading technology, quality concerns, inadequate manpower frequent change of local branch sales team. low levels of dealer motivation, lock of innovation and absence of good sales support systems are some of the reasons.”

Is this valid? Dealers who dos stock the brand don’t confirm this but some say they get hidden margins like free CTVs at the end of the year (the company declined to discuss this).

One reason Videocon fell out with its dealers was its strategy of high volumes and low margins. An advertising executive who has worked on the videcon account says the schemes that videocon periodically runs in the market hit the prospects of the brand.

While these schemes have varied - from giving dealers free foreign trips, to the Gold Dhamakaheld during the festive season - the market has changed. Dealers say that has changed. Dealers say that multinationals have been been able to much Videcon in most schemes, robbing them of their novelty.

Videocon lost its grip on the market as multinationals not only have deep pockets, their low - volume premium products give them better margins than Videocon, a high - volume, mass producers.

As competitive pressures built up, Videocon had tried to make sure . every dealer would stock its products. Market analysts point out that a single brand of consumer durables can have a maximum dealer penetration of roughly 60 per cent - that is, a single brand like Videocon can be present only in six out of ten out lest. This is because the dealership of consumer durables are normally clustered in one location, like Opera House in South Mumbai, and no dealer would like to stock a brand that is available in the next showroom.

This led to Videocon’s experiement with multi - branding. Between 1988 - 1999 , Videocon signed two joint ventures. First, a Videocon
group company kitchen Appliances India Limited. (KAIL).

How videocon lost its grip

Signed a joint venture with the Japanese Sansui Electric company in 1998. In April 1999, Videocon took a majority stake in a 70:30 venture with the Hong King -based semitech group to form Akai India Limited.

These joint ventures were for assembling, marketing and distribution of the Sansui and Akai brands of durables in the country. And Videocon already had in place a technical and marketing arrangement with another brand, Toshiba, which was the company’s technology partner for Videocon television too.

According to an executive who was involved in the multi-branding strategy, the concept was to consolidate the group’s standing in the market. The company thought that the market share of the brand, which was 27 per cent at that point would drop but stabilise at 20 to 21 per cent. The remaining three brand would develop over a period of time and collectively grab a 15 per cent market share, thus getting the videocon group a respectable market share of 35 percent in the CTV segment.

videocon started off by dividing Akai and Sansui into different business units. The company appointed chief operating officers for both Sansui and Akai -Anil Khera was the Coo for Sansui, while Basant Pande took care of Akai, Videocon was managed by the Dhoot family. This way, each brand would get specific attention and no brand would grow at the cos of another.

The company looked at two options. One, demarcating mutually exclusive outlets for each brand, and two, positioning each brand for a different segment of the market. Akai and Sansui were “discount offer “ brands, Videcon occupied the mid priced segment, and Toshiba the premium segment.

What confused the buyer. Ditto for all company executives. A year - and - a half ago, akai’s Coo Pande told The Strategist (November 14 2000), “ We may not eat into each other’s share. Even if we do, we would feel sorry for them as for any other rival.”

The net result was that the foriegn labels grew at the cost of videocon. The January - December 2001 reports of ORG substantiate this. In 2001. Videocon had a mardet share of 10.7 per cent in the 5.4 millionunits CTV segment which was just a shade above the brand’s 10.4 per cent market share in 2000. But Akai increased its share from 3.2 percent in 2000 to 5 per cent in 2001 and Sansui increased its market share from 5.7 to 6.7 per cent in the same period.

Other core advantages were also disappearing with increasing competition Videocon had always played the value - for- money card, with a price tag that was 10 to 15 per cent less than the competition. But in the midnineties, Mumbai-based Baron International (which looked after Akai in India before Videcon acquired it) dragged the entire durables industry into a price war with aggressive exchange offer schemes on Akai CTVs and audio systems. The result was that videocon lost its USP.

Prices of CTV across brands have fallen by over 40 per cent in the last decade. Today, price - wise., Onida and BPL match Videocon at the lower end of the market. Market observers also feel the fall in demand for the Videocon brand in urban markets could have dangerous repercussions as rural markets could respond in a similar fashion sooner or later.

Videocon’s disappearing dominance in the CTV segment had a domino effect on other categories like washing machines and refrigerators. With approximately Rs 7,000 crore of the Rs. 14,000 crore consumer durables industry coming from CTV segment (if the brand is present across categories like videcon, BPL, LG and Samsung).

And there were other failures too like the refrigerator segment. Videcon was the first to introduce frost-free refrigerators to India in the 1990s through its technical tie - up with Japanese major matsushita Electronics, but it was a premature step in a market where direct cool refrigerators account for 95 per cent of volumes. Initially, Videocon’s production facility in Aurangabad was able to produce only frost-free offerings, so sales volume utilise capacity efficiently but by the time the Bangalore facility started churning out direct refrigerators in the last two years, frost - free refrigerators had made inroads in the Indian consumer’s psyche.

Communication is another area where Videcon has seen its share of highs and lows. Today, LG and Samsung occupy platforms like “health” and “digital” repetitively, which are extended across-product categories. This helps save media costs. because the message covers all categories. Dhoot insists that such platforms are not relevant. specially in the rural market. “ The rural consumer needs only a reliable and value for - money product,” he says.

But senior advertising executives point out that the advertising of Videocon has lost its sheen, evident, for example, in its “King of the jungle” commercials for its CTVs. As Videocon grew in size, it chose to highlight its leadership positioning through a new tag line “Bring home the leader’ which did little to communicate specific product benefits.

Now, Dhoot points out, the company’s advertising with film star Shah Rukh Khan for Internet televisions and celebrity endorsements through Hindi film heroines will help in increasing recall.

Internet TVs is one other area that Videocon is exploring. Other players, like Onida, have failed in this segment because consumers, world - wide and in India, have treated computers and televisions on separate platforms. How ever, Dhoot is confident that his product made the company’s facility in Shanghai, China, will find a market in India and foreign countries. He claims to be selling 50,000 units already.

But if agency sources are to be believed then videcon is playing safe with its Internet television venture. The company is reportedly in the process of launching campaign where each of it televisions will be projected as Internet compatible. And the consumer can then decide whether he wants to make his television internet - enabled for an additional charge of Rs 3,000

But can be done to stop the erosion of Videcon’s brand equity? Already the brands popularity in stock market i nowhere near the high point to of Rs 255 that the share of Videocon International was valued at in 1994. Today the videcon scrip trades at approximately Rs 25

The huge potential of the Videcon brand needs to be leveraged. Cajoled and defined, “says senior advertising professional. Sources close to the company say that the Dhoots are doing the rounds of their major dealership to win them over. But it’ll be a ling and hard struggle in a market that’s crowded and volatile.

_Business Standard