Vardaan proves a boon for Philips

Philips India, which for long had shied away from playing the price game, is betting on affordability in its quest for bigger volumes. 
 
Philips had launched its low-priced CTV range Vardaan in October last year and ever since its sales have increased by around 25 per cent, claimed S Nagarajan, head (sales & service) of Philips India's consumer electronics division. Already, the Vardaan range accounts for nearly 60 per cent of its CTV sales. 
 
According to Nagarajan, CTV sales in the first quarter of 2004, a traditionally low offtake period, sales went up by more than 25 per cent compared with the same period last year. "In 2003 we were running the World Cup offer and we had record sales. We have improved on that performance this year," he said. 
 
In the last few months Philips has also cut prices of its DVD players and home theatre systems by 15-20 per cent. "We are setting new benchmarks both in terms of technology and product pricing. We now have a home theatre system that costs Rs 16,000 and the new DVD carries at a price tag of Rs 3,990. Philips' 29-inch CTVs are priced on par with competing 25- inch CTVs brands," said Nagarajan. 
 
In 2004, Philips is targeting sales of 600,000 to 800,000 DVD players and a market share of close to 60 per cent in the organised sector. 
 
The aggressive pricing strategy is a big change of course for Philips as earlier this year the company's vice-president (consumer electronics)

D Shivakumar had said that Philips could not be price driven as it wasn't the cheapest manufacturer. 
 
The company's focus was on achieving market leadership in niche, high margin product categories such as plasma TVs and hi-fi music systems. The company is placed fifth in the 8.5 million units-a-year CTV market behind LG, Samsung, Videocon and Onida, and according to industry estimates, it has a market share of a little more than 5 per cent. Nagarajan claimed that in three years Philips would be among the top three CTV makers. 
 
"Aggressive pricing is now possible with volumes increasing and cost of technology going down. We are not just cutting prices but also packing in more features in our products," Nagarajan said. 
 
Philips' two-pronged strategy for India is to increase penetration in rural areas with the Vardaan range and grow new product ranges such as DVD players and home theatres through aggressive pricing. 
 
"We realised that growing the high end market is not possible without a good share of the mass market," he added. 
 
According to Nagarajan, Philips' consumer electronics division is set to cross the Rs 1,000 crore (Rs 10 billion) sales mark this year, up nearly 50 per cent from its turnover of Rs 675 crore (Rs 6.75 billion) in 2003.