Last year, Sony Corporation aimed to double revenues from the BRIC countries (Brazil, Russia, India and China) to two trillion yen (about $18.6 billion) by 2011. Given the economic slowdown, Masaru Tamagawa, managing director, Sony India, believes India will be better suited to help Sony meet its worldwide target.
He spoke to Suvi Dogra about his plans for the Indian market. Excerpts:
How will India contribute to Sony's BRIC growth strategy?
For China, the economic dependency on exports is quite high and they export mainly to the US. Due to the economic environment, exports have come down drastically. On the other hand, in Brazil -- which is a big exporter of food and raw material -- the situation is tough since prices have come down. In the case of Russia, the credit crunch is making the business environment challenging.
India, on the other hand, has faced a certain degree of slowdown, but overall it is faring better than other BRIC countries. As far as the consumer electronics business is concerned, growth may have come down as compared to the previous year but the Indian market is still in a growth phase and we are optimistic about the prospects.
The consumer electronics industry grew at a slower pace last year. How did Sony fare?
Sony India posted sales of Rs 2,830 crore (Rs 28.30 billion) for April to December, 2008, which is a 25 per cent growth from Rs 2,264 crore (Rs 22.64 billion) the corresponding period last year.
Any change in the strategy for 2009?
While we have not yet chalked out a complete strategy for the coming year (2009-10), the focus will continue to be on Bravia LCDs, Vaio laptops and Cyber-shot digital cameras. We believe digital categories will grow and fortunately we operate in this category only and not in the traditional categories. We will accelerate digital transformation in India.
Also, we will push our home theatres, MP3 walkmans and PlayStations. Sony plans to drive the growth in these categories with attractive products and effective marketing communication.
We plan a further enhancement of sales channel network and operations as well. In order to add to the quality of Sony stores, the branding of the exclusive retail store has been brushed up from Sony World to Sony Centre. There is also an IP-grade in display, the method of demonstration and the quality of floor salesmen has also been raised to the world standard level in order to provide a new shopping experience to the consumer.
What about pricing?
Both the appreciating yen in the first half of the year and the depreciating rupee has lead to a 'double impact' on our import costs. But, till now, we have not passed this to our customers. Despite reduction in excise duty, the adverse exchange rate fluctuations have been a reason for us to hold the prices for now. Every year, the image resolution, in terms of megapixels, has been increasing but we have been able to sustain the prices.
How important for Sony is the rural market?
The rural category is not our direct target consumer. We will continue to focus on metros and tier I &II cities with the target consumer having an average annual income of Rs 5 lakh (Rs 500,000) and above.
Worldwide, Sony had announced job cuts. What about India?
India is a growing market and hence there is no need to cut jobs. However, this year, we may refrain from hiring more people.
What is the contribution of each of your key drivers -- Bravia, Cyber-Shot and Vaio -- to the total sales?
The sales of LCD televisions and Playstations trebled during the nine-month period over the previous financial year 2008-09; sales of MP3 players grew seven times. Laptops and digital cameras registered 60 per cent and 40 per cent growth, respectively.
The Cyber-shot range is one of your growth engines. How do you plan to leverage the brand in 2009?
We hope to sell around 500,000 units in the current financial year, and to that end we have introduced 11 new models under Cyber-shot. The aim is to increase our market share from 37 to 42 per cent by the end of 2009.
We will increase the penetration of our products by expanding through the photo channel and will invest Rs 20 crore (Rs 200 million) to market the cameras. We have tied up with 150 such outlets and by the end of the current fiscal, we see the number reaching 250. The photo channel contributes 20 per cent to the total camera sales for the company.
Sony spent around Rs 60 crore (Rs 600 million) on advertising and marketing Bravia in the country last year. What plans do you have for the LCD category?
For 2009, our focus will be on consumer electronic items like digital cameras and large LCD televisions. Also, our target consumer is very different. Our brand is more aspirational and we target a higher income family group. Sony products are of the kind that you can hope to own when your income grows and that is the image we would like to promote.
However at this point, the plans for communication investment are still under finalisation. We would be able to share information on investment in the next few months.
In terms of product innovation, what are the key drivers for Sony?
Style, design and cutting-edge technology are the key focus area for Sony products. Sony India's focus has always been towards making a difference in the lifestyle in the Indian market and opening up new vistas of entertainment in the country.
Sony India will remain committed towards offering new-age technology and digital concepts while working hand-in-hand with the Indian industry to produce and sell excellence. There will be a consistent commitment towards service that has brought the company closer to the Indian customer.