 "New players heat up TV market this Diwali")
Veena Joshi, a housewife from Bandra in Mumbai, has a list of products to buy this Diwali. Among them is a TV she is seeking to replace her old one. “Three years ago, when I bought my old TV, the options were limited to Korean and Japanese brands, and maybe one Indian brand, Videocon. This time, my research shows that the choice is far wider and there are newer players in the market. I may just try them out,” she says excitedly.
Joshi is not alone, Indian consumers find themselves being wooed by companies such as LeEco, Micromax and Intex, brands that have emerged as serious alternatives to established TV manufacturers such as Samsung, Sony, LG, Toshiba, Videocon and Panasonic in recent times.
LeEco, a Beijing-based company, started TV operations only this August, but has already forced players such as Videocon to slash prices of its 55-inch flat-panel TVs by Rs 20,000 to match its price of nearly Rs 60,000 for a comparable model.
Not to be left behind, Intex, which makes an entire lineup of mobile phones, has priced its full HD, or high-definition, 55-inch TV at Rs 70,000, while Micromax is the most competitive of the lot, pegging a similar model at Rs 50,000.
As Y V Verma, a consumer durables expert, who has worked with LG and Onida, says, “The strategy is simple: deliver feature-rich products at affordable prices. In many respects, these companies are taking a leaf out of their smartphone marketing manuals to draw the attention of consumers. In a crowded market, where there is so much to choose from, disruptive pricing is inevitable if you have to gain market share.”
The price differential between the newer names and the established brands can vary between 15 and 35 per cent depending on the screen size. But there are sweet spots, as Shubhajit Sen, chief marketing officer, Micromax, says: “Competition will largely be in the Rs 40,000 to Rs 50,000 bracket for Tier I markets, whereas in Tier II & III towns, the attention will be on the Rs 20,000 to Rs 25,000 segment. What we are seeing in the TV market today is similar to the smartphone market in 2013, where players like us brought down price points and democratised the category. There will be more of this as technology increasingly becomes accessible to all.”
While analysts argue that cutting price is a zero-sum game, where market share comes at the cost of profitability, the newer brands are focused on driving scale alone. Established brands, however, are not expected to resort to discounting beyond a point because it could erode brand value, say experts.
Faisal Kawoosa, general manager, telecom and semitronics, CyberMedia Research, says: “While volumes count, it is impossible to cut price beyond a point. Pulling the price lever may give you customers now, but users may not be ready to pay later. That is a risk that most of the newer guys are taking. But no one is complaining since the market is growing. Consumers are getting into the category at the lower end, some are upgrading fast. Replacement rates are moving up quickly. The net effect is that the category is growing.”
The three new players are already claiming that they’ve made significant inroads in a market that has been dominated by big TV manufacturers for long.
Sen says Micromax has close to 10 per cent of the TV market today and proposes to take this to 12 per cent by the end of this financial year. Though refusing to comment on market share, Nidhi Markanday, director & business head (consumer durable & IT peripherals), Intex Technologies, says that the company sold 75,000 LED TVs in September 2016, and it is looking to grow significantly in the October-November period.
LeEco India’s Chief Operating Officer Atul Jain says the company has sold 12,000 TVs since launch in August and that it will continue to build on this momentum. According to trade sources, a new range of TVs is expected from LeEco shortly following response to the first range of TV sets.
Fastest growing segment
It is easy to see why new players are entering the TV market. After mobile phones, say experts, TVs are the most promising consumer electronics category in India, given that they remain a key provider of information and entertainment in many households. TV sales are expected to touch 16.5 million units by the end of this calendar year, a growth of nearly 14 per cent over last year.
Experts pin down the growth to rapid technological advancements and the push by domestic players, which has seen the traditional cathode ray tube (CRT) TVs make way for flat-panel TVs, mainly, light emitting diode (LED) TVs.
According to industry estimates, LED TVs constitute about 12 million of the overall TV market and will continue to grow as the internet and television converge. It is this end of the market, which experts call the smart TVs and which is 5-8 per cent of the LED TV market now, that will boom in the next phase.
“The need for smart TVs,” Markhandey says, “also comes at a time when people are seeking bigger and better products. This is noticeable in the urban areas where big TV screens, 55-inch and above, do well. Smart TVs seem to fit into the overall scheme of things as it acts as a converged device,” she explains.
Intex launched its Smart TV range this year and so have Micromax and LeEco.
Keeping costs low
One way these new players have managed to keep prices low is by taking the online-only route. The Vu brand of TVs, promoted by the Saraf family that owns Zenith Computers, has been selling online for a while now and has emerged as the largest selling TV brand on e-commerce platforms, according to market estimates. It is looking to close the current fiscal with sales of Rs 600 crore, led largely by its TV category, that straddles the price pyramid from Rs 30,000 to Rs 3 lakh.
Not only has minimal distribution expenditure online allowed Vu to keep prices under check, but the company has also attempted to stay ahead of the curve with new design and features. The company last month launched premium ultra high definition TVs and curved TVs at almost half the price of comparable models by existing players. The next television leap appears to have begun.
Joshi is not alone, Indian consumers find themselves being wooed by companies such as LeEco, Micromax and Intex, brands that have emerged as serious alternatives to established TV manufacturers such as Samsung, Sony, LG, Toshiba, Videocon and Panasonic in recent times.
LeEco, a Beijing-based company, started TV operations only this August, but has already forced players such as Videocon to slash prices of its 55-inch flat-panel TVs by Rs 20,000 to match its price of nearly Rs 60,000 for a comparable model.
Not to be left behind, Intex, which makes an entire lineup of mobile phones, has priced its full HD, or high-definition, 55-inch TV at Rs 70,000, while Micromax is the most competitive of the lot, pegging a similar model at Rs 50,000.
As Y V Verma, a consumer durables expert, who has worked with LG and Onida, says, “The strategy is simple: deliver feature-rich products at affordable prices. In many respects, these companies are taking a leaf out of their smartphone marketing manuals to draw the attention of consumers. In a crowded market, where there is so much to choose from, disruptive pricing is inevitable if you have to gain market share.”
The price differential between the newer names and the established brands can vary between 15 and 35 per cent depending on the screen size. But there are sweet spots, as Shubhajit Sen, chief marketing officer, Micromax, says: “Competition will largely be in the Rs 40,000 to Rs 50,000 bracket for Tier I markets, whereas in Tier II & III towns, the attention will be on the Rs 20,000 to Rs 25,000 segment. What we are seeing in the TV market today is similar to the smartphone market in 2013, where players like us brought down price points and democratised the category. There will be more of this as technology increasingly becomes accessible to all.”
While analysts argue that cutting price is a zero-sum game, where market share comes at the cost of profitability, the newer brands are focused on driving scale alone. Established brands, however, are not expected to resort to discounting beyond a point because it could erode brand value, say experts.
Faisal Kawoosa, general manager, telecom and semitronics, CyberMedia Research, says: “While volumes count, it is impossible to cut price beyond a point. Pulling the price lever may give you customers now, but users may not be ready to pay later. That is a risk that most of the newer guys are taking. But no one is complaining since the market is growing. Consumers are getting into the category at the lower end, some are upgrading fast. Replacement rates are moving up quickly. The net effect is that the category is growing.”
The three new players are already claiming that they’ve made significant inroads in a market that has been dominated by big TV manufacturers for long.
Sen says Micromax has close to 10 per cent of the TV market today and proposes to take this to 12 per cent by the end of this financial year. Though refusing to comment on market share, Nidhi Markanday, director & business head (consumer durable & IT peripherals), Intex Technologies, says that the company sold 75,000 LED TVs in September 2016, and it is looking to grow significantly in the October-November period.
LeEco India’s Chief Operating Officer Atul Jain says the company has sold 12,000 TVs since launch in August and that it will continue to build on this momentum. According to trade sources, a new range of TVs is expected from LeEco shortly following response to the first range of TV sets.
Fastest growing segment
It is easy to see why new players are entering the TV market. After mobile phones, say experts, TVs are the most promising consumer electronics category in India, given that they remain a key provider of information and entertainment in many households. TV sales are expected to touch 16.5 million units by the end of this calendar year, a growth of nearly 14 per cent over last year.
Experts pin down the growth to rapid technological advancements and the push by domestic players, which has seen the traditional cathode ray tube (CRT) TVs make way for flat-panel TVs, mainly, light emitting diode (LED) TVs.
According to industry estimates, LED TVs constitute about 12 million of the overall TV market and will continue to grow as the internet and television converge. It is this end of the market, which experts call the smart TVs and which is 5-8 per cent of the LED TV market now, that will boom in the next phase.
“The need for smart TVs,” Markhandey says, “also comes at a time when people are seeking bigger and better products. This is noticeable in the urban areas where big TV screens, 55-inch and above, do well. Smart TVs seem to fit into the overall scheme of things as it acts as a converged device,” she explains.
Intex launched its Smart TV range this year and so have Micromax and LeEco.
Keeping costs low
One way these new players have managed to keep prices low is by taking the online-only route. The Vu brand of TVs, promoted by the Saraf family that owns Zenith Computers, has been selling online for a while now and has emerged as the largest selling TV brand on e-commerce platforms, according to market estimates. It is looking to close the current fiscal with sales of Rs 600 crore, led largely by its TV category, that straddles the price pyramid from Rs 30,000 to Rs 3 lakh.
Not only has minimal distribution expenditure online allowed Vu to keep prices under check, but the company has also attempted to stay ahead of the curve with new design and features. The company last month launched premium ultra high definition TVs and curved TVs at almost half the price of comparable models by existing players. The next television leap appears to have begun.