Hitachi, which has recently launched 22 new models of air conditioners, is trying to widen its reach and have people across categories buy its ACs, despite the premium tag attached to the brand. Gurmeet Singh of Hitachi Air Conditioning India Ltd tells us how they plan to do that...
BY NEETA NAIR
Q] You have launched 22 different models of ACs, how different is the range this time?
We have a product with the ‘iSee’ technology, which is able to sense a two or three dimensional picture of a person inside the room, and shift the air flow towards him. It gives you a very high level of comfort because the AC is directed towards you and as soon as the temperature reaches to a certain level, it can move away from you. We also have a product with iClean technology to address the biggest problem with using air conditioners—i.e. most of us never realise when the AC’s filter needs to be cleaned. This AC, however, comes with a filter cleaning mechanism like a brush inside. That brush moves on the filter, cleans it, picks up the dust and puts it in a dust box inside the AC, which you need to clean only once a year. As a result, your AC always remains clean. Thus, it has three benefits rolled into one. Firstly, you are always breathing clean air because the AC filter is always clean. Secondly, your AC is working at very high level of efficiency because when the filter is not clean, the AC consumes a lot more power. And thirdly, if you buy a 5-star AC, it continues to function like one despite years of usage. So, it’s a great feature at a slightly higher price point.
Q] How soon do the products hit the market and by when will you launch the marketing campaign?
The products should be available in stores this month. Our marketing campaign will be a 360 degree one. We are ready with the TV commercial which is usually the most difficult thing to execute. Usually we launch in the middle of March, but this time it could be anytime in the middle of February.
Q] How much will you spend on the Digital medium?
It would be reasonably large. Last year we spent almost 10% of our budget on digital. Going forward, we would do more than that.
Q] You had earlier said that the brand will maintain a growth rate of 15-20% in the coming years… is that on track? What was it like in 2017?
In 2017, it was roughly about 15%. We are the number three AC brand in India currently. Achieving the 20% growth rate target would revolve around two-three pillars. One, of course is the product-led pillar. The second is the huge channel expansion we are planning. When we spoke of reaching out to everyone, we realized that we are very strong at the upper end of the pyramid and reasonably okay in the middle, but towards the bottom rung we are very weak. So, we are reaching out to the middle segment strongly and may also enter the lower rung gradually. Thus, increasing reach will result in additional numbers and volume.
Q] But Hitachi is still perceived as a premium brand, will you try to dilute that tag?
I never said that we are doing away with the premium tag. When we use the phrase, ‘Every home deserves Hitachi AC’, we are saying that while buying our AC seems to be a slightly more expensive deal, you deserve it. So buy it even if you have to spend a little extra. And the campaign that will hit the screens this year has a beautiful tagline, ‘Kabhi kabhi zyaada ke liye zyaada nahi chahiye hota’, indicating that even if you have to pay a little more, it’s not all that much.
Q] What are the innovative ways through which Hitachi has been reaching out to customers?
Our new communication strategy last year was able to create resonance with the consumers as it was based on extensive market research and surveys conducted. We strongly believe that any brand is successful only when it stops being a ‘Me-Me’ brand and becomes a ‘We-We’ brand, and the same was conveyed in our communications and reciprocated well by the consumers as well. This was supported by our intensive advertising strategy with special emphasis on the IPL season and Digital medium. We also launched a new and innovative on-ground activation ‘Hitachi Express’ for the AC consumers in South India. Equipped with Hitachi ACs for display and a team of dedicated Hitachi cooling experts, this brand wagon reached out to the target audience at their door step. And it used three interactive and innovative mediums- Augmented Reality, Virtual Reality and e-catalogues using tabs to engage, educate and inform the consumers and help them in selecting the right Hitachi AC for their homes.
Q] How different is your strategy for rural and urban markets?
We realized that there was a gap of accessibility of Hitachi’s products in Tier 2 and 3 towns. To address this issue, we introduced our new models designed specifically to cater the needs of first time buyers and mid-segment AC buyers. Also, with the aim of expanding the brand’s reach in Tier 2 and 3 markets, we have expanded our retail outlet presence from 4,000 in 2015 to 8,500 by the end of 2017, and we are now working on adding 2,000 more outlets to take the total number of outlets to 11,000 by 2018. We also aim to double our annual sales to Rs. 4000 crore in the next three years, as the AC market in India is the company’s fourth largest globally with a 10% market share, hence making it a focus market.
Q] The AC penetration in India is under 5% compared to the global average of 30%. What are the steps you are taking to make your products reach a wider audience?
India’s air conditioner market is the fastest growing in the Asia-Pacific region today and it is expected to keep growing in the coming years. Despite the current 5% AC market penetration in Indian households today, with the changing perception of the masses towards this category and with the increasing awareness about energy efficiency, the demand for eco-friendly and energy efficient air conditioners is growing rapidly. It is already a well-known fact that the residential building sector is one of the largest consumers of electricity in India and by 2020, India is projected to become the world’s third-largest energy consumer, after the US and China. Thus, to address a bigger issue in hand as well as to deliver smart and energy efficient products, Hitachi has introduced 22 new models this year, taking the total model count of the company in the market beyond the 100 mark.
Q] What is the biggest challenge that Hitachi faces in the Indian market?
As a manufacturer and trader of air conditioners, delivering products that are least detrimental to the environment and easy on the pockets of customers is our main objective. While our engineers are working on developing innovative cooling solutions, responsible e-waste disposal is a major challenge that we are facing. Currently, we have limited expertise in recovering products that are at the end of their life cycle from the end users. Even if we maintain the data of such end users, the recovery of products is very challenging, considering ACs as a product have a relatively longer life compared to other consumer durables. Spanning over more than 10 years, these products also change hands before they reach the last mile. Under such circumstances, the informal sector acts as a pivotal cog in the wheel of e-waste recycling. Unfortunately, as a producer and manufacturer, our reach to this sector is limited. Collaboration of entities like Producer Responsibility Organization (PRO) with the informal sector can play a crucial role in helping us achieve our objectives and collection targets.
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