‘It has become a price game here of late’

Disputing the perception that Philips is a brand focussing on the elite class, Murali Sivaraman, managing director and CEO - Indian subcontinent, Philips Electronics India, says the company has a presence in broad spectrum of products. He spoke to DNA  on the company’s strategy to tap the mass market. Experts…

Philips is perceived as a company catering to the upper middle-class segment in India.

How do you intend to change that?
I’d differ on that perception. We have a much wider range of products across categories and price points that touch the Indian consumer in some form or the other. For instance, we are amongst the largest players in the market for incandescent bulbs.
I often tell people in a lighter way that I could be there in the form of a Rs 10 bulb in a small household and also a Rs 8-10 crore MR/CT machine in a large hospital.
We have products across price points (+/- 5% vis-à-vis the market leader) in consumer electronics, where we are a household name. However, of late it’s become a bit of a price game here, with an increased number of players.

As for our kitchen range, if you strictly evaluate them on price points, we are pretty much in quartiles three and four and not much in quartiles two and one of the consumer segment. So we play in a very broad spectrum with respect to these products.

That’s not the case in the healthcare space though?
I do acknowledge the perception here. We have been mostly selling imported products and hence were not participating in the value space. While being competitive, a lot of our B2B solutions, owing to the brand and bundling of solutions and benefits being offered, commanded a premium of 10-15% over competition. This is about to change. We have recognised that, to play the emerging-market game, we will have to be present across all price points.

The idea going forward will be to leverage on the brand which is already a household name and the distribution channel that allows us to penetrate much deeper into the market.

Targeting the fast-growing healthcare market, we will bring in innovative products that will bring healthcare to Indian homes. Philips plans to garner a market share of 40% in the home healthcare market by 2013.

How do you intend to reach out to the middle and bottom sections of the population pyramid?
We have a local development team that will work to create new businesses and design local strategy for them. The water purifier concept around ‘sense and simplicity’ is a great success story. There are many more products that are under various stages of development.

 We will also be launching products designed for rural markets. These
include the woodstove range and LED-based lanterns. It will be a great learning experience for us as it’s for the very first time that we will be entering villages.

What is the pricing strategy adopted by Philips for India?
Pricing for us is a question of the category we want to play in. We are consciously trying to differentiate with other players there. To cite an example, we have decided not to play the volume game in the LCD TV category. This is because you don’t make money there and there is no point in losing money. But, wherever the brand commands a premium, we back it up with spare parts, after-sales service, warranties to bring a pleasant experience to the customer.

Is the company primarily driving growth through acquisitions?
No, growth will primarily be organic. However, I’m open to inorganic play if it fits into our strategy and portfolio across lighting, lifestyle and healthcare sectors. Our earlier acquisitions were in line with the company’s focus on driving growth from emerging markets. The companies we acquired were operating in the value space (low-cost high-quality healthcare equipment) and bringing them into the fold helped in strengthening our market position here. So there was an opportunity available and we grabbed it.

You were talking about lighting lounges as an experiential marketing concept for the luminary business division. How are you going to create these spaces?
We already have two such lounges, one each in Delhi and Mumbai. These are experience zones created across 700 to 1,000 sq ft area and exhibit every solution we have to offer in home and office lighting space. We have identified 35-odd cities for opening these lighting lounges.

These lounges will be created in partnership with a key distributor. Locations would naturally be places where there is captive audience. We will look at a combination of shopping malls, high streets and stand-alone locations in addition to partnering with retailers to create a shop-in-shop concept.