Durables firms to increase ad, branding spends

Despite tough market conditions, consumer goods companies are either increasing or maintaining last financial year’s advertising and branding (A&B) spends on the back of good Diwali sales this year.

Most companies had increased their A&B spends in FY09 to counter a dip in consumer sentiment, and had introduced many new products. The results were good, with firms clocking up to 50 per cent growth in sales this festive season over the year-ago period.Taking the cue, LG Electronics has planned a 15 per cent increase in its A&B spend for FY10, whereas Samsung has maintained its budget of 4.5 per cent of its overall revenues. Godrej Consumer Appliances has also decided to stick to allocating 5 per cent of its revenues to A&B. In absolute numbers, this would imply an increase in A&B spends of both the companies as they have predicted a double-digit growth in their revenues.

Nowadays, marketers are also reaching out to consumers directly. This explains their participation in product demos, exhibitions, trade shows, road shows and retail activation with better displays at the Point of Sales (POS) and Point of Purchase (POP) and creating live ambience in the dealer showrooms.

They are also stepping up their investments in research and development, after-sales service and expanding their presence to smaller cities as they look at maintaining their growth forecasts in spite of the slowdown in the markets.

Talking about Philips’ marketing strategy for the coming year, Vivek Sharma, chief marketing officer, Indian sub-continent, Philips says, “The focus will be on the brand and not its promotion this year.” The company has earmarked investments for R&D, product and market development, showroom upgradation, setting up of more after sales service centres and also upgrading the software and hardware skills of its employees at the call centre.

Samsung has invested $13 million (around Rs 60 crore) for hardware R&D this year. Keeping in mind, the semi-urban consumers’ preferences, Samsung launched its flat TV with an easy viewer that gives consumers similar facilities like that of a set-top box. The company has also launched customised washing machine and refrigerator areas for domestic markets.

Samsung Deputy Managing Director R Zutshi says, “The product innovations will cater to the preferences of the diverse Indian consumers. Additionally, we are now focusing on reaching out to our consumers in their local language.” This reaching out for the company includes giving live demos, distributing pamphlets in vernacular languages and creating Flat TV and LCD TV walls in dealer showrooms.

However, the slowdown has made marketers more prudent as they are asking for accountability and better return on investments (ROI). “Marketers are reworking their marketing mix and cutting costs wherever the spends are not justified,” explains Sandeep Lakhina, MD (India, West and South), Starcom Worldwide. The agency handles accounts such as Samsung and the Mobile Store among others.