The electrical goods firm has outspent its rivals in brand building.
Havells India has a problem of plenty. In the past few years, it acquired brands like Standard, Crabtree (for India) and Sylvania (for the whole world except North America), meant to fill the gaps in its mass-market brand, Havells, like high-end switches, lighting etc. However, in the last two years, Havells has moved up the value chain, improved brand recall and made inroads into new markets for fans and lighting products. So, what does it do with the high-cost brands?
Havells is the anglicized name that Haveli Ram Gandhi, gave to his switchgear firm he started several decades ago. and later sold to one of his distributors, Qimat Rai Gupta. In the years that followed, Havells diversified into switches, cables, lighting and fans. (It also moved from a cramped workplace in Civil Lines in Old Delhi to a swank 130,000 sq ft office called QRG Towers in Noida.)
Of the Rs 2,200-crore turnover, industrial and institutional buyers account for around Rs 800 crore while exports fetch Rs 200 crore. Retail sales bring in around Rs 1,200 crore with over Rs 1,000 crore coming from the Havells brand and the rest (switches) from Crabtree. (Sylvania adds another 440 million Euros to the group’s turnover.) It is the leader in switchgear, second in cables after Finolex and in switches after Anchor, fourth in fans and second in lighting after Philips. These categories have strong brands (Philips and Osram in lighting, Crompton Greaves, Orient, Polar and Khaitan in fans, Finolex in cables) but companies spend not more than one or two per cent of their turnover on brand promotion. And a large part of that is below the line. In 2007, Havells realised that if it had to stand out, it had to outspend its rivals.
From around Rs 15 crore, the ad budget was upped to Rs 60 crore— just over four per cent of the turnover—and Lowe’s Balki devised a campaign. It put out ad spots during cricket matches since the target customers are men between 25 and 45 years of age (electrical fittings are selected by men, tiles and bathroom fittings by women. Fortunately for Havells, India did badly in the World Cup in the Caribbean islands and spots were going cheap. “We struck a very good deal with ESPN for the Natwest trophy in England, T-20 World Cup in South Africa and the India-Australia series Down Under,” says Havells India Joint MD, Anil Gupta. Both campaigns,one for switchgear (shock laga) and the other for cables where a child makes tongs for his mother with a Havells cable so that she won’t burn her fingers making rotis, were well received.
Next, Havells aired a commercial for fans where a dancer faints from exhaustion but recovers once the fan (of course, Havells) is switched on. However, a campaign for fans during IPL-II this year, which showed floods of sweat, didn’t work. Nevertheless, the promotions have helped. According to Sunil Sikka, President, lamps and fixtures are no longer sold at a discount to market leader Philips and the per-unit realisation of its fans is the highest in the industry. The company’s investments of Rs 200 crore every year for the last five years, in new manufacturing facilities has also helped, adds Gupta.
Still, there is a market for a discount brand. Institutional and government orders go to the lowest-priced bid. To drop prices could take the sheen off the Havells brand. So, the company is trying to use the Standard brand for such products. Also, the market for low-cost fans has grown rapidly in the last few years and Havells could plug it with Standard.
As for Sylvania, Gupta is in no hurry to bring the brand to India since it would compete with Havells. So he has decided to watch Havells’ progress in the lighting market for another three or four years before he takes a call on Sylvania. The brand has a fair recall in India. But the success of Havells could well block its second innings in India.
