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| Bundled offers flood durables market |
| Seema Sindhu & Pradipta Mukherjee / New Delhi/Kolkata Oct 16, 2009, 00:39 IST |
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When Pradeep Prabhal set out to buy a Nokia multimedia mobile as a Diwali gift for his son, he was in for a pleasant surprise. He received a ‘Nokia Diwali Gift Envelope’ containing details of a cash back offer in the form of a scratch card along with his mobile — and he even won Rs 500.
In fact, Nokia’s cash-back offer — ranging from Rs 201 to Rs 10 lakh — was available on 11 models. There was an additional marketing offer — information on free downloads such as games, wallpapers and ringtones for Diwali. Nokia India Director (Sales) Vipul Sabharwal says: “This is the first-ever cash-back offer on mobile devices, along with innovative applications.”
Nokia is simply a case in point. Consumer durables companies are trying every game in the book and trying to outdo their competitors in a bid to lure consumers and create a buzz around their products this festive season, which typically results in 30-35 per cent growth in sales.
Haier Appliances India, for example, will celebrate Indian womanhood with the ‘Haier Bhagyalakshmi offer’ — a scratch card offer giving assured cash back of up to 100 per cent on purchase of any Haier refrigerator, washing machine, AC or colour TV. Last year, they offered customers an opportunity to visit China. This time, they are offering a wild card entry in a renowned contest.
Not to be left behind, Godrej & Boyce has associated itself with the movie Alladin, releasing this Diwali. Lucky winners will get one assured lifestyle product (which costs between Rs 700 and Rs 4,000), or an opportunity to act in an Eros movie, or a meeting and dining with Amitabh Bachchan. And Samsung is giving a 22-inch LCD TV free with the purchase of an LED TV of 40-inch and above screen sizes.
These promotions, say companies, are planned in advance in terms of cost and product combinations, and are factored in annual promotional budgets. The gift schemes are planned through a cost-sharing mechanism between dealers and the companies concerned.
Analysts, though, are skeptical. Technopak India MD Harminder Sahni, for instance, does not see great value in such offers for consumers “...as most of the complimentary gifts are very small-value gifts”. He explains: “While the consumer will feel happy that he saved Rs 6,000 getting a free microwave with an LCD, for the company the cost is not more than Rs 3,000. Sometimes even less than that as free gifts are usually excess inventory.”
Moreover, scratch cards and lucky draws offer a smarter way of promotion. Sahni explains that while such offers generate great excitement, only 5 per cent of the inventory gets used to make up for the ‘assured’ gifts.
KPMG Manager (Business Performance Services) Anand Ramanathan concurs that there are multiple objects behind such deals which help a company bear the associated cost in multiple ways. “It helps the company liquidate its inventory, which, if not disposed by year-end, will lead to certain loss. It also helps the company to increase consumption of related products like DVD players, microwave, etc, so expanding the category market, which is a long-term strategy,” adds Ramanathan.
And there are consumers like Amit Jha, too, who do not fall for these offers, “Such offers are stock clearance things, and turn out to be sub-standard.” Sumeet Chaudhary, another consumer, concurs: “I had bought a TV last year during Diwali. Along with it, I got a complimentary flask. But the TV had several faults — bad picture quality, etc.”
The cardinal rule, analysts say, is ‘Caveat emptor’.
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