What were the key learnings from Whirlpools early hiccups in India
I hope others have learnt something from us too. When we started, there were some very strong brandsVoltas, Alwyn and Godrej. But look at the market now. Some of them are there, others arent. The bottomline is, in a competitive scenario someone gets ahead and someone lags behind.
Ultimately you have to know who you are targeting. Whirlpool focuses on the home. We have introduced new features in our refrigerator modelscosmetic holders, chocolate boxes, special capsules for lemons, LED and appealing colours. Just to cite an example, in India, a whole lot of people are vegetarians and they do not need space to freeze meat. Which means double compartments to do not makes sensea lot of space goes waste. We have moulded double door refrigerators to suit their needs. Such innovations have helped us immensely.
Certainly we are seeing a growth in volumes. In the refrigerator market, our share in the direct cool segment is 27%, and in frost-free it is 22%. If you combine the shares of refrigerators and washing machines, Whirlpool has about 24%. In microwaves we are in low single digit, but we hope to change that by the end of the year. Good news is we are growing at15%. Our projection is that the results will be substantially better this quarter.
In the first quarter this year, Whirlpool Americas operating profit was up 19%, while in Asia, it improved 63% over last year. However, Indias contribution to the total pie is till very small. Why
Asia has been largely colonised by European companies such as Unilever and Reckitt because of old trading ties. Americans came in much later. Whirlpool also entered the scene at a much later stage; and so the size is relatively small here. Today, the whole world looks at the two fastest growing economies of the worldChina and India. Whirlpool is not blind to that.
Of course, America is the seat of excellence. But it is from India that we are export products to a large number of countriesAustralia, South East Asia, Sri Lanka, Bangladesh, the Middle East, Africa, and the Central and Eastern European countries. Exports are about 13% of our turnover here. In fact, products under the KitchenAid brandcoffee makers, grindersare being manufactured at our Pondi- cherry plant and marketed in the US and the Caribbean countries. Its a statement about the confidence that the corporation has in India.
We have got full-fledged operations in the country. But the moment the Chinese business grows it will completely alter the picture of Asia. China is where we are headquartered for the region. All said, the priority now is to focus on these two countriesIndia and Chinain Asia. East is the new west as they say. About $15-20 million is planned in overall investments in manufacturing in India alone.
Last year you introduced Bollywood actors, Ajay Devgan and Kajol, to endorse Whirlpool products in India. How has the move helped
Its been a year since the brand pitched in with Kajol and Ajay. So if you take some of the events that took place in 2005 and you look at how the market share moved then I would say they have definitely helped. This is also visible from the feedback from press and neutral people. While last year we only had one creative execution in a TVC, this year you are going to see them morea new refrigerator film, two washer films on air and one more in quarter three.
And how far do you think you are going to carry this association
A contract is between two parties. Both have to agree. From what they have said to the press, and on one occasion when I was present, they see no reason to discontinue. We hope this works out. On its part, Whirlpool believes this association is just perfect, something that we would like to continue.
How has your advertising budget moved over the years Are there any plans of tapping the online space, which remains largely unexplored
Our advertising budget has been in line with our growth. If you take advertising along with other activities, its Rs 50-55 crore this year. This includes media advertising, trade marketing, production. Last year, it would have been 15% less. In terms of the medium used, it has traditionally been 50:50 between TV and print. This year it will be little bit more in TVabout 65:35. I admit we havent used the net too well; but that will change.
It will be time for Diwali soona good time for consumer durable companies to make a killing. What are your plans and what are the new products consumers can expect
In Diwali you do a lot of rewards-related programmes for the consumer. The idea is to bundle a lot of stuff over and above the appliances they buy. We will have all of that this year too. Last year we just didnt restrict to gifts; we touched our consumers through festivalsfrom dandiya to cookery contests.
As we speak we are working on plans for this season, and by early next month we will be able to firm up some of those. One of them being the launch of a specialilised washing machine.