Sam­sung switches fo­cus as ru­ral push grows

Business Standard - - COMPANIES - ARNAB DUTTA & VIVEAT SU­SAN PINTO

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 archri­val 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, semi­au­to­matic 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-mi­dlevel 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 vi­cepres­i­dent, 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 low­erend prod­ucts.

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