At Videocon, Dhoot Jr pushes price warrior to premium products

Last Updated: Tue, Aug 14, 2012 19:11 hrs

It is known for sturdy products targeted largely at the masses. Now, home-grown consumer durables major Videocon, which began selling colour television sets 25 years earlier, has prepared a plan aimed at making it relevant to urban consumers, a market that has largely eluded it.

Videocon derives 60-70 per cent of its volume sales from rural areas. The balance comes from urban markets. In a move aimed at helping bring both category sales to an even 50 per cent each, the company is pushing a premiumisation strategy in categories such as flat panel television sets, refrigerators and air conditioners, segments where Korean and Japanese companies have had a head start.

Spearheading this is Anirudh Dhoot, 34, son of Videocon chairman Venugopal Dhoot, slowly but steadily stepping out of the shadow of his father, who rewrote the rules of the game in the past two decades by driving a low-cost, high-volume business model, coupled with a few acquisitions such as that of Electrolux, Kelvinator, Kenstar, etc.

Dhoot, director at Videocon and responsible for branding, sales and marketing, says the focus will be on products that are technologically-driven to help draw the attention of urban consumers. “There is no dearth of choice for the urban consumer, who is also technologically-savvy. It was important for us to fill this gap in our portfolio,” he says.

In the process, Videocon is chiefly taking on Samsung, which is also driving a premuimisation strategy in India. Dhoot, an MBA from Cardiff University in the UK who joined the group a little over 10 years before, says he is not worried about his Korean rival. “There is room for all,” he says. “We have the distribution reach; our flagship brand is known. We needed to raise our profile a bit. We are doing that now.”

The company, which has 11 manufacturing facilities (eight in India and three abroad), has just launched light-emitting diode (LED) TVs that eliminate the need for a set-top box to receive digital signals. The technology allowing this is called Digital Direct Broadcast (DDB), showcased recently here by a consortium of seven players, including Videocon's direct-to-home (DTH) division. DDB-compliant TVs also allow three-dimensional viewing, internet browsing and cloud computing.

By cloud computing, the reference here is to computing and storage capacity over a network. End-users access cloud-based applications through a web browser, while the business software and data are stored on servers at a remote location. For cloud computing, an internet connection is a must, which DDB-compliant TVs are able to provide. While most high-end TVs today double as personal computers, with a virtual keyboard and the TV remote as a mouse, none has so far provided direct digital transmission. Experts say DDB will be a game changer in that sense.

About five years earlier, Videocon had attempted something similar, launching satellite TVs, but the product did not work in the marketplace. Dhoot says this time the market is moving in a direction where cutting-edge technology is the buzzword.

The 3.8-million flat-panel TV market in India is slated to touch five million by the end of the year, buoyed by a surge in demand for LEDs, whose price points are rapidly falling vis-a-vis liquid crystal display TVs, which constitute the bulk of the market.

Videocon is bundling its DTH service with the new range of LED TVs, priced at a premium of 15-20 per cent to regular LEDs in its portfolio. Dhoot says an aggressive marketing campaign to promote the new range of TVs is to be launched this month, with Bollywood actor Shah Rukh Khan as brand ambassador.

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