Mumbai: We have just bid farewell to Dussehra festivities and now Diwali is around the corner. This is the time when the Rs 25,000 crore consumer durable and electronic sector will do, whatever it takes, to shore up the sales. Scanning through the festival noise, what's striking this year, is that companies like LG and Whirlpool have upped prices of appliances just before Diwali.
However, to pump up the tempo, the companies are rolling out freebies as usual. To control adspends, most companies will really gear up only close to Diwali.
The consumer durables industry grew at just about 4 per cent this year. Onam and Durga
Puja sales have been labelled mediocre. Ganesh Chaturthi sales were better off at about 20 per cent. Now, Diwali is a make-or-break opportunity for this sector. Actually, think any festival and think discounts in the same breath.
But brace yourself for a shock. For the first time, companies like LG and Whirpool have upped prices for appliances like airconditioners and refrigerators by 10 per cent -15 per cent, as a pre-Diwali offer. Experts are linking this to a buoyant demand, while companies say, with rising raw material costs, this is a sign of the seasons to come
Head of Marketing, LG Electronics, Sandeep Tiwari told CNBC-TV18, "At a price for which you got a 21-inch low-end television, you now might get a higher variant for the same price.
The trend is more in terms of getting more value for the same price. And that trend is likely to continue. No more will prices slide with each passing year."
Diwali Decibels
Prices of high-end products like Plasma and LCD TVs have been slashed by 10 per cent to 15 per cent. Sparkling margins in this category are driving companies like Samsung and Sony to push these products. The industry hopes to sell 45,000 LCD TVs and 10,000 plasma TVs in these two months.
Managing Director, Vijay Sales, Nilesh Gupta says, "In the high-end category, internationally prices have fallen and it's a good thing it’s happening around Diwali, so it will fuel the growth.”
Usually the noisiest sector during the Diwali quarter, consumer durable spends were over Rs 62 lakhs on TV advertising and over Rs 82 lakhs on print. This festive season, LG's marketing spends are Rs 100 crore. Topping that with a Rs 150 crore spend is Videocon, which is aggressively driving brands like Electrolux and Sansui.
Sources say, the upcoming Champions Trophy and the ICC World Cup will eat into LG and Videocon's Diwali TV adspends. But companies may just be saving their best for last. Sources say most companies like Onida and Haier plan to boost advertising decibels in the last 10 to 15 days, when most durable shopping happens.
Vice President, Marketing, Onida, Vivek Sharma says, "We shouldn't expect a huge change in noise levels in Diwali because while expenditure will shift from Diwali to the Champions Trophy but the period in which the money is spent is made shorter and shorter, so money spent in 4 weeks will be spent in 2 weeks."
Discounts may be out this season, but advertisers are keeping freebies on the table.
While the four-year-old concept of scratch cards, still thrives, what's cool now is declaring free gifts upfront. Interestingly after Onida, both LG and Samsung have come up with DVDs or dinner sets, but that's mostly on high-ticket items.
The impact of raised ad-spends can be felt here. By next Diwali, apart from in-store branding, brands expect retailers to carry more weight because that is when heavyweights like Reliance and the Tata Group will be up and running.
Apart from company promotions, Mumbai-based Vivek Sales, is already running a "win a car" promotion, this Diwali. Perhaps, a tell-tale sign of things to come.
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