To move quickly up the ranks, BSH is going full-throttle with its new approach to cater to a diverse set of consumers. It is building up its presence to have a strong play in three segments — mass-premium, premium and now luxury category.
“Unlike other industry giants, we have three different brands with distinct brand positioning. With a single brand, industry players often compromise either the premium or the mass premium positioning,” says Gunjan Srivastava, managing director and chief executive officer, BSH Household Appliances.
At present, BSH offers consumers a vast portfolio of home appliances and consumer durable products under three brand categories — Siemens, Bosch, and Gaggenau. Siemens targets premium audiences and Bosch, a mass premium brand caters to the upper middle classes. The recently introduced product line Gaggenau aimed at wooing ultra-high-net-worth individuals (UHNIs) and high-net-worth-individuals (HNIs).
Clearly, the company’s approach is in stark contrast with that of competitors. Based on its distinct market segmentation approach, the company has picked up different distribution channels for its products. For example, for the luxury brand Gaggenau, the company has a limited distribution footprint and leverages a small part of its pan-India network of 3,000 stores. Unlike, the other two brand portfolios, for Gaggenau, BSH has set up a separate sales team. It leverages influencers to reach out and engage UHNI and HNI buyers. The strategy works well as products under Gaggenau are priced between Rs 2 lakh and Rs 22 lakh.
On the other hand, refrigerators and washing machines under the Bosch brand are sold through regular dealer network running into thousands. Siemens products that are again premium and are built in appliances are sold through small network of kitchen retailers.
For example, Bosch front loader washing machines start from Rs 27,000 to Rs 80,000 (9 kg). In comparison, Siemens washing machine starts from Rs 35,000 (7 kg) and goes up to Rs 80,000 (9 kg).
Besides prices overlapping for a few products, Gunjan says there are products that are exclusive to only one of the brands. For example, high-end and built in office coffee machines are exclusive to brand Siemens.
Currently, BSH’s size in India is small. It has a market share of nearly two per cent in the household appliance category.
Srivastava points out, “This has largely to do with the fact that we are a young company. We have been the last major entrant into the consumer durable space. We have only been around for the last seven to eight years.”
He asserts that globally, India continues to be a strategic market for the German player. The proof is in the numbers. BSH India’s business is growing at the rate of 30 to 35 per cent year-on-year, says the MD-CEO.
At present, the company covers 250-plus cities and plans to expand to 300-350 cities in the next two years. It also has a strong team of 100-plus engineers on different product categories.
BSH India is also working hard to further capitalise on product categories that it is leading in. The company claims that it is a market leader in dishwasher category with a 50 per cent share. Another promising segment for the company is Bosch’s cooking category which is growing by about 50 per cent YoY.
The company is also augmenting its manufacturing facilities. In May 2018, the company laid the foundation of a refrigerator factory at its 44-acre Chennai facility. By 2021, the new facility will manufacture about 41,000 units, targeting more than 400,000 units by 2028 for domestic consumption as well as export to other emerging markets.
BSH plans to invest €100 million over the next four to five years. The investment will be targeted to boost research and development, develop an expansive portfolio of localised product offerings, setting up more stores.
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