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Bajaj Electricals set to launch separate brand for rural India

Source : BUSINESS_STANDARD
Last Updated: Tue, Oct 30, 2012 20:02 hrs

Bajaj Electricals CMD Shekhar Bajaj says there is a scope for an economy brand that would change the nature of the consumer electronics business in rural India. These products are likely to be priced much lower than Bajaj’s existing products, and would come with a different finish and design

Bajaj Electricals is set to follow a ‘mera gaon, mera desh’ strategy to keep its growth curve intact.

The company, known for its mass market strategy, is planning to launch rural-specific brands under the Bajaj umbrella to tap the most price-sensitive segment in the country — the rural mass.

“We are working on the options. Essentially, these would be economy brands targeting the people living in rural areas. These could be sub-brands, or could also come with a unique identity under the Bajaj umbrella,” said Shekhar Bajaj, chairman and managing director, Bajaj Electricals.

The company is yet to finalise a name for the brand, as well as the launch date. However, the economy brand is likely to be introduced within the next year. “Rural and semi-urban India have been identified among the key growth drivers for future,” Bajaj said.

These products are likely to be priced much lower than Bajaj’s existing products, and would come with a different finish and design, said Bajaj. The company has already tested the semi-urban and tier-IV cities with sub-economy products. “Now, we feel the need for an economy brand that would change the nature of the consumer electronics business in rural India,” he aspires.

But, before it launches the economy brand, Bajaj would finalise the strategies for its distribution in rural India, including villages that have power just for a few hours a day. Pricing is important, but one should keep in mind the quality of the products, as these would bear the Bajaj name. Bajaj believes that penetrating the markets, which are mostly dominated by unorganised local assemblers, would not be difficult as Bajaj is already a known name in Indian households.

Krunal Mehta, vice-president (brand management), Angel Broking, said that it could be “a very good ploy” to enter the rural markets with a separate brand. Given its strong dealer network, coupled with strong product range, it would be a “logical move” for Bajaj “to create a parallel target segment and cater to that so that the growth multiplies”, said Mehta.

The new economy brand would have the entire range of Bajaj’s existing product portfolio, including lighting products, appliances such as irons, water heaters, immersion equipment, low-cost fans, and some rural-specific products could also be added, depending on market feedback, said Bajaj.

Bajaj would essentially set up regional super stockists and distributors to push the economy brand in areas with population below 50,000.

Besides, Bajaj is toying with the idea of introducing a separate brand for the modern retail format. “This would be high-end products targeting the affluent class. Separate brands for different set of consumers would maximise the distribution mechanism. So, a product that could be sold through modern retail, would not be pushed through the dealers or distributors in the mass market,” Bajaj pointed out.

Bajaj Electricals, which reported Rs 3098 crore revenue in FY12, is targeting more than 20 per cent rise in sales in FY13 with revenue reaching Rs 3,700 crore.

The company is also likely to focus on LED products for the metro markets over the next five years. Bajaj said about 50 per cent of urban consumers are estimated to shift to LED over the next three to four years. But, it would continue to sell tradional lighting equipment and fans, to cater to the rural and semi-urban markets. “People in rural and semi-urban areas are unlikely to shift to LEDs so early given these products are expensive,” he added. To enhance its technology and product offering in LED, Bajaj Electricals has tied up with US-based RUUD Lighting and MegaMan, he said.

With prices of domestic LPG going up and the government capping supply of LPG cylinders for domestic use, Bajaj expects sale of induction cooker would cross Rs 150 crore in FY13, a 50 per cent rise from Rs 100 crore last fiscal year. “We are readying the inventory,” he said. A considerable portion of induction cooker sales would come from semi-urban areas, he added.




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