Better quality gets better prices


Customers are now willing to pay for premium, better quality and products with superior features. For them price is not the criteria. We are giving below the growth in the sales of a few white goods which reveal the consumer trends.

The premium product categories like flat TVs, LCD TVs, frost-free refrigerators and spilt ACs continue to outperform conventional product categories like CRT televisions and direct cool refrigerators largely due to product range availability attractive pricing and the technology up-gradation that is happening in the market place.

The fact that sales of premium consumer products have been growing over the last few months is known. But the first quarter this year; premium products, including flat and LCD TVs, spilt air-conditioners and frost-free refrigerators have outperformed the conventional categories.

During Q1(Jan-March’06) the growth in flat TVs was 52.7% and frost-free refrigerators 19% according to ORG. As against this, conventional TVs reported a huge drop of 21% and direct cool refrigerators grew by a mere 8.8%.

Also top loading washing machines (fully automatic) have grown by 9.3%, while the front loading category has had a growth of nearly 15%. In the case of Air conditioners, split ACs have grown by nearly 150% during the first quarter.

The growth in the premium products has a lot to do with the price rationalization that has been happening over the last couple of years.

There has been a major price alignment which has taken place, especially in the case of plasma and LCD TVs. With the global consumption of these products going up, millions of units are churned out, and prices have been coming down. There will be a drop in prices by 15-20% per annum which further can add to the buying spree of consumers.

During Q1, the CTV market grew 5.2% with 1.8 million units sold. Of this, 9.3 lakh units (51%) were flat TVs, while 8.9 lakh units were conventional TV (48.7%).

Affordability, retail exposure of the products, and easy and attractive consumer finance has also affected the purchase decision of consumers. Most companies have set up exclusive outlets to sell the high-end products. Samsung has set up ‘Digital Plazas’ and Sony India has ‘Sony World’ in the metros.

Marketing director of Samsung has said that they are increasing the growth of their premium categories based on strong, differentiated product lineup and innovative marketing activities like the ongoing Samsung Dream Home Road Shows that show case complete range of premium products at one location.

It is not that the consumer likes have suddenly changed. Increase in their disposable income and knowing the benefits of superior quality products the customer is willing tp pay the price for a better product. That is why white goods with more and more new features and one superior to another appear in the retail outlets almost every 3 to 6 months.