Role reversal for electronics majors

LG is positioning itself as a maker of premium consumer products.

For long, Sony and Samsung have held an upmarket image in the country, selling their products at a premium over those of their rivals. LG, on the other hand, has had a mass market image "" a producer of affordable consumer durables.

The rankings on the value are set to change. A role reversal is silently taking place in the Indian consumer durable business landscape. LG, which has built a huge reputation and amassed a significant market share on the back of affordable pricing, is consciously promoting higher end products. The Korean company has undertaken a strategic initiative to position itself as a maker of premium consumer electronics.

LG's recent television commercials for its new LCD TV, Pearl Black, and Viewty mobile phone point in that direction.

On the contrary, its arch-rival, Samsung, which has traditionally promised superior technology and has commanded a premium, is now talking to the masses. Ditto for Sony. You can now purchase a Sony DVD player for as low as Rs 2,500!

Samsung is pushing for affordability. Its range of televisions in the 21- and 29-inch flat TV category are among the most competitively priced in the business.

Three years back, a similar range of Samsung televisions would be selling at a 4-5 per cent premium over the competition while Sony would do so at 8-10 per cent.

"Both Samsung and Sony have reduced their prices, especially over the last one to two years but the momentum is not as great as what LG's was," says an industry observer.

What is prompting the change in strategy? For Samsung, say industry rivals, it's a move to catch up with LG in the market share game. LG's market share in televisions is 25 per cent as compared to Samsung's 20 per cent, as of December 2007.

For years, Sony has been the image leader in televisions but that never reflected in its market share. However, the move to make its products more accessible has paid off, claim Sony executives.

"We have tripled our turnover in the last three years to reach $500 million last year. We plan to achieve our target of $1 billion by 2009 in India," says Takakiyo Fujita, general manager (marketing), Sony India.

Even as they become more affordable, Samsung and Sony are hesitant to give up their upscale image. "Samsung's focus has been on technology-driven growth. This has helped us drive both volumes and garner more market share. Our focus will continue to be on technology innovation," a Samsung spokesperson said.

Adds Fujita: "For Sony India, while intense competition has always been a factor in the consumer electronics sphere, we have always created our own niche market with our own set of customers."

LG, however, has no qualms in accepting that it is climbing up the ladder. "We plan to become aggressive as far as premium products are concerned by way of change pricing, consumers and products to move from mass to premium." LG also plans to tap the young, affluent, tech-savvy consumer for the same.

"Innovation and lifestyle is what will be the focus to give the consumer relevant products," says V Ramachandran, vice-president (sales and marketing), LG Electronics India.