Sony's new idiom

The Japanese consumer electronics major has moved ahead of the Korean chaebols in the 3.5 million-unit flat panel TV market via aggressive price cuts and distribution.

Before the Diwali of 2010, Korean chaebol Samsung was the clear leader in the 3.5-million-unit flat panel TV market with a share of about 32 per cent. Then came Sony at 30 per cent, followed by LG at about 22 per cent.

The tables have turned, with Sony now leading the pack with a share of about 35 per cent, followed by Samsung at around 30 per cent and LG at close to 25 per cent.

If that’s not enough, Sony, according to its India managing director Masaru Tamagawa, hopes to add another 500 basis points to its overall share, taking it to 40 per cent in the next two months.

What is driving the confidence of the Japanese major? Industry sources say the Japanese firm, which has been around since 1994, has become aggressive in the marketplace in the last one year.

Sony executives say the game for them now lies in volumes. That’s a new idiom for a company which has always prided in its only-premium image. In the last five months, Sony has taken two price cuts, one in September-October, of about 6-7 per cent, and one last month, of about 12 per cent. Effectively, a 32-inch Sony flat panel, which cost over Rs 32,000 six months ago is now available for Rs 26,400. However, Sony’s 32-inch TV continues to be marginally higher than LG’s, which is priced at Rs 25,000.

Tamagawa, a Sony veteran who was managing operations of the company in West Asia prior to his India appointment in 2006-07, appears to be taking inspiration from KR Kim, rival LG’s charismatic former boss, who turned around the fortunes of the company in a span of six years after taking charge in 1997. Like Kim, Tamagawa is focusing on three key factors: brand enhancement, sales channel enhancement and hiring local talent.

“From 200 brand shops, we have steadily added another 70 in the last few months,” he says. “We are also focusing hard on our brand equity even as we remain committed to hiring local people,” he says.

Of the 800 people that Sony currently has in India, only 12-13 are Japanese expatriates, he says. “The balance are all local people.”

On the brand enhancement front, the company has adopted a two-pronged approach: hire the best and stay top-of-mind with sustained marketing campaigns.

The company is doing just that with recent inductee Mahendra Singh Dhoni, who endorses Sony’s Bravia range of flat panels. A Rs 100-crore marketing budget has been set aside for the World Cup alone. Tamagawa says 3,000 TV spots have been booked across 19 leading channels during the 45-day extravaganza.

Dhoni will be the third brand ambassador after actors Kareena Kapoor and Deepika Padukone, who endorse Sony Viao (laptop), and Cyber-Shots (cameras) respectively.

Cyber-Shots, for the record, is the leader in the camera space with a share of over 30 per cent. Canon follows with a share of around 25 per cent, while Kodak is third with a share of less than 20 per cent.

In the competitive laptop market, however, Sony trails behind Dell, HP and Acer. “But the endorsement of Kareena has worked for us,” says Tamagawa. “She’s the best.”

While Sony finetunes its India market strategy, industry sources say it still has much work to do. “In terms of product quality and strength in flat panels, Samsung is still better than Sony,” says a former Samsung executive, who now works for a rival consumer electronics company. “It has managed to gain share in the last few months on the back of price revisions it has undertaken,” says an executive from LG, who declined to be quoted. But then, the aggressive price corrections can hit profitability.

For now, however, the visibility for Sony India is clear.