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Premium bonanza

Drawn by new technology and features that high-end electronics are offering, consumers are opening their minds and wallets to products that were considered too elitist till recently

business Updated: Sep 26, 2010 20:56 IST
Anita Sharan & Rachit Vats

What’s a “refresh rate”? If you’ve bought an LCD, LED, HD or 3D television recently, chances are you will see a “200Hz” or some similar mention on the piece. The refresh rate delivers smoother images in much clearer detail than what conventional picture tube TVs delivered.

Chances are your new television (is it a 36-inch or a 40-inch or 55-inch screen size that you opted for?) also mentions “Full HD”, which means it is capable of delivering high definition images. Unless you have already bought a 3D TV. And maybe you can even plug in a memory stick — like you can in computers — to run a film stored on it, instead of playing it off your DVD player. Unless you have a Blu-ray player? Perhaps you even have internet access on your TV?

Does your new refrigerator have two side-by-side doors — called “French Doors” — and maybe also an ice dispenser on a door, on the outside? Or is your vegetable section independently accessible without disturbing any other section? How about 360-degree cooling? Does your freezer section have its own light? And is your freezer at the top or at the bottom of your fridge?

Did you recently replace your window air-conditioner with a split AC, or did you just opt for the latter directly if you were buying for the first time? Is it power-saving starred? Does it have additional clean or fresh air technology? Humidity control?

How about your washing machine — is it fully automatic with fuzzy logic, auto power shut-off and features for more efficient washes?

Most consumer electronic brands in India agree that there is a trend in metros and larger cities towards upgrading to premium products. What were till not so long ago considered ‘halo-effect’ products for brands at the upper end of technology and price range, are finding willing takers as consumers willingness to stretch their wallets.

“At LG, we are seeing a growing appetite for premium products. There are two factors contributing to this, the primary being growing disposable income. Other than that, most consumers are now upgrading. Currently, close to 80 per cent of our premium products being sold are actually to consumers who are upgrading,” said Yasho Verma, COO, LG India.

“The demand for premium products is definitely driven by upgradations currently. High-end products are commanding good volumes — we are seeing 30 per cent of our volume sales coming from flat panel TVs, 70 per cent from split ACs, 38-40 per cent from frost-free refrigerators and more than 45 per cent from fully automatic washing machines,” said Ravinder Zutshi, deputy MD, Samsung India Electronics.

“A new generation of Indian consumers has emerged that desires aspirational and high-end quality products. Value enhanced features, cutting-edge technology, unparalleled quality and a convenient lifestyle are all rather important to them. Hence, the modern-day consumer is open to experimenting with new and latest technologies and demands products that match global features,” said Tadato Kimura, GM marketing, Sony India.

At the high end of the consumer electronics spectrum, Sony is betting big on its 3D TVs this year. The ongoing festival season will find it investing a whopping Rs 45 crore on marketing activities for its 3D products alone.

“We have already launched a complete range of 3D professional solutions, consumer electronics, movies and gaming. The hardware products in 3D include Bravia LED TVs, Blu-ray disc player and Blu-ray home theatre system. Our entry level 40-inch, 3D TV model, at Rs 1,23,900, will be bundled with 3D Blu-ray player, 3D surround sound speakers, nine software titles with 3D content and two units of 3D glasses,” said Tadato.

Sony expects 30 per cent of its revenues from 3D-related products by 2012.
Rather surprising, you could say, considering that there is very limited 3D software available and being expensive, you could well wonder how many production houses will opt for 3D content. Samsung informs that nearly 16 new Hollywood titles are expected to be in the 3D format this year. By 2014, nearly 20 per cent of Hollywood films are expected to be in 3D. Samsung expects to sell around 30,000 3D TVs by December.

In India too, 3D is not an alien idea, with studios already offering to convert 2D software to 3D. Besides, major sporting events are expected to drive 3D broadcasting across the world and in India. IPL 3’s semi-finals and finals were showcased on select cinema screens in 3D.

Samsung’s Zutshi said that Indian consumers are opting for premium consumer electronics driven more by features than price. So the latest Samsung TVs — LCD, LED, 3D LED and plasma — ranging in price from Rs 13,900 all the way up to Rs 4,70,000 are finding takers, as are frost free refrigerators at Rs 14,500-1,70,000 lakh, split ACs at Rs 16,500-36,000 and fully automatic washing machines at Rs 10,700-44,000.

“The premium end delivers higher values. Around 60 per cent of out value earnings are coming from our premium products,” Zutshi said. “Not only are consumers buying premium, but a ripple effect is also occurring out of the metros. LCD TVs are no longer a metro phenomenon. Already, even in semi-urban and rural markets, while consumers are buying mass level products, they are looking for premium additions.”

In the near future, upgradations will continue to boost premium-end sales, is the opinion. Already, replacement cycles are down across the consumer electronics spectrum, with the TV replacement cycle shrinking from 10 years to around five years. Zutshi pointed out that as more premium products sell more numbers, their prices will come down, pushing up sales further.

Meanwhile, the industry expects to sell much more premium consumer electronics this year as compared to last year. It expects LCD TV sales to jump by 100 per cent or more. Sales expectations on split ACs, fully automatic washing machines and frost-free refrigerators are also very positive.