Consumer durables companies are pruning freebies, hiking prices

NEW DELHI/ MUMBAI: If you've been coveting that 32-inch LCD television for long, waiting for the festival discount to buy it, chances are you will be disappointed.

Many manufacturers, hemmed in by input cost pressures, have decided not to offer discounts or free gifts this shopping season. In fact, some of them even intend to hike prices soon. Samsung, LG and Philips are among the durables makers who have decided to not give any freebies.

V Ramachandran, director, marketing, LG India Electronics Pvt Ltd, said, "LG as a company has moved away from discounts. Innovation and good customer services will be our focus. Besides, the input costs have gone up significantly and we have not been able to pass it on to consumers completely. Plus, the dollar-rupee dynamics have badly impacted our import costs."

Philips India, which has been big on gifts, discounts and combo deals all this while has decided to strictly rely on its brand to bring in the sales.

"Although it has become customary in our country to offer gifts during Diwali, our strategy has changed and is not about deep discounting," said Vivek Sharma, chief marketing officer, Philips Electronics India Ltd.

Samsung India has followed a similar drastic change in its strategy. "Giving a jug or iron cannot change the product profile, customers are looking for decent prices rather than discounts," said R Zutshi, deputy managing director, Samsung India. "With current inflationary trends prevailing, you can expect 3%-4% increase in price across product lines post Diwali," added Zutshi.

The prices for Samsung products across products have already gone up by about 6% in the last two months. Philips has also hiked prices by 3% last month itself. Videocon products have started costing 5% more in the last three and half months.

Videocon is the only one among the biggies going the traditional way by offering freebies. "This is because we have recently integrated all our six brands and we wanted to go all out promoting them," said Sandeep Tiwari, assistant vice president, marketing, Videocon Industries. Videcon has a major Rs100 crore campaign lined up, three-fourths of which will be the costs of the freebies.

Will the absence of freebies and higher prices hamper sales? Not really, say manufacturers. They are all targeting year on year growth of 30%.

The festival season has already started with Onam, Ganesh Chathurti and Eid over and Durga Puja well on its way. Sales, nevertheless, have been encouraging for manufacturers and retailers.

"There is a pressure on profitability in current market conditions, but customers are still buying and industry is still growing, Indian consumers have matured over time and are now looking at product profile," said Zutshi.

Videocons Tiwari agrees. "It is domestic consumption that drives our market which has not been as affected by the ongoing global crisis." he said. The sentiment among premium urban consumers may be down, but smaller towns and rural India will continue to thrive, say durables experts.

Advertising and promotional spends for companies have increased by 20% on an average, according to them.

New products with strong after sales service will be the new mantra for manufacturers, so those looking to get a free MP3 player with their washing machine could well be disappointed.

Source : DNA