Samsung switches focus on mass segment as pressure to go rural grows

After years of putting the spotlight on the premium end of the durables market, Korean electronics major Samsung has now turned its focus on the mass segment as the pressure to go rural grows. The move will pit Samsung directly with arch-rival LG, the leader in consumer durables in India with over 25 per cent market share, especially at the mass end.

Nearly half of the home appliances market by volume and 40 per cent by value is made up of categories such as direct cool refrigerators, semi-automatic washing machines and lower-end flat panel television sets, sector experts say. Demand for these products, they say, are coming from mostly smaller towns, cities and villages, areas that Samsung is now focusing on in a big way as tier I and II markets are getting increasingly saturated.

The Korean major, as part of its rural push, has begun an “attack district” project with focus on 80 key districts to increase sales of its TVs, refrigerators and washing machines, top company officials said.

According to the officials, this would be the first time Samsung would focus on a “district-level strategy” for its consumer durables business by rolling out value-for-money models across “entry-to-mid-level segments”, expanding sales and distribution points from 35 to 47 locations and earmarking a separate investment plan for market development.

“We are moving from a channel to district-level operations, having identified areas with huge potential,” said Rajeev Bhutani, senior vice-president, marketing, Samsung India. “We expect almost two and a half times growth in smaller towns with such a strategy.”

Samsung is also building its service capabilities in these markets, running over 500 vans in 6,000 talukas, as the need to go deeper into the hinterland grows. “Improvement in infrastructure and rural electrification is driving demand,” Bhutani said. Companies, he said, would have to push deeper into rural areas as the need for growth increases.

A recent report by Nielsen said the January-March 2018 period saw rural markets for consumer goods companies growing 1.4 times that of urban markets. The trend is likely to get stronger with a good monsoon and more rural-focused initiatives by the government like higher minimum support price for crops announced last week. Samsung’s push into rural markets incidentally coincides with its effort on the manufacturing front, where the firm is focusing on lower-end products such as solar-power-driven refrigerators and specially developed semi-automatic washing machines. 

The company, sources said, added new lines at its durables factory in Noida to cater to production needs for rural markets.