Panasonic, a household name in India long ago, had been noticeably missing in action for a good portion of time.
Panasonic, a household name in India long ago, had been noticeably missing in action for a good portion of time. Being a still-relevant contender meant coming back with something extra, as playing catch up would only do so much. Manish Sharma of Panasonic India speaks with BrandWagon’s Shinmin Bali about where the India market stands for the company, mobiles being a gateway towards connected services, a perception overhaul and more. Edited excerpts:
How is Panasonic India shaping itself to align with global objectives of growth, given its increasing B2B focus?
Out of the overall revenue of Panasonic Corporation, about 72% comes from B2B and the remaining from B2C. The Indian consumer knows Panasonic primarily as a consumer appliances brand. The brand is much more diversified than what we understand in India. If we go back, say five years, there used to be about 80 different business divisions within the corporation which was the kind of diversity the group overall possessed. Subsequently, the company’s strategy was the concentration of various business divisions and also to do away with some businesses.
About four years ago, we decided to exit the plasma and medical devices business. Those were tough calls at that point of time but this was a part of the restructuring of Panasonic. We have transformed from being a product-centric organisation to being a solutions provider.
The intention of the corporation is to provide solutions for home, workplace and transit modes such as a car or a plane. Between 1994-2001/2002, we were in serious business with much expansion in TV, audio systems, ACs and washing machines. India, in a larger sense, was ignored from 2002 to 2008. The Corporation realised that there has to be a proper focus and from then on, we can look at 2008 as the time of Panasonic’s re-entry in India.
The lost years were when competition gained ground and the ecosystem changed. How do you view that?
We lost a lot of time in this period and therefore, lost a lot of opportunities in terms of market share, and presence into channel, equity and awareness.
The first three years were about breaking the re-entry barrier because during that time, Korean companies had expanded their footprint into the country with reasonably high awareness. One of the challenges was figuring out our positioning because we were known more as a mom-and-pop brand. People in their 40s and 50s used to associate with Panasonic as their brand but we were nowhere in the consideration set for the youth.
To reposition ourselves, we decided to have brand ambassadors that could connect with the youth. We started off with Ranbir Kapoor and Katrina Kaif in 2008-2009. Kapoor used to endorse our electronic products while Kaif endorsed air conditioners for us. In other measures, we associated with cricket and Bollywood. We associated with the IPL (as sponsors of the Delhi team for about five to six years) and the IIFA awards.
Between 2012-2015, we expanded our manufacturing footprint, with investments in having our AC factories, washing machines, expansion of capabilities for the television factory and some of the B2B products like welding machines, etc. The last phase was about expansion, going into smaller towns, creating distribution capabilities and product-specific channels into consumer businesses.
Will the aim be to lead by B2B in India as well?
In the next three years in India, we want B2B and B2C to have an equal split. We are looking at a CAGR of 23-25% and clocking around `11,000 crore in terms of revenue this financial year. In India, we do not aspire to lead with B2B. I personally feel that the entire identity of Panasonic lies with the consumer space in India; there is huge scope to expand consumer businesses as penetration is still very low. I am not sure how would the organisation evolve for the next 10 years in terms of revenue but there might be a possibility that B2B revenues outshine B2C. But the identity for Panasonic for the long-term will remain in the consumer space.
How successful has the brand been in altering its image and how has that affected communication spends?
We are on our way to achieve that. It was a long period for us to leave things to the competition. They have obviously not stayed silent all this while. If we have to outshine competition, we have to be very smart and design products which would be appreciated by consumers. The youth, as we all understand, is very demanding; so loyalties may not remain as they used to be.
Much has changed — digital marketing and community building are important, and so is being close to consumers at the point of sale. Currently, ATL would be at 2.5-3% of revenue and BTL would be about 9% of revenue. So overall, communication spends stand at 11-12% of revenue.
In smartphones, Panasonic is playing catch up. What is the strategy to push this category further?
In terms of product design, battery would come first followed by the processor to provide smooth operations. We are not chasing high margins in mobile but we are looking at creating an ecosystem where in the future, we can provide better living within the house. The idea is to build an overall application and a connected environment with our consumer products.
Mobile will continue to be one of our focus categories — we are looking at serious growth there but the original objective is to provide total solutions to consumers; that you will see happening in two or three years.
Our price points in mobile range from Rs 6,900 to Rs 15,900 — so this is the belly and not the niche. These are consumers that look for better empowerment and services. There is a legacy of products already in the market, so how do you create differentiation? This will take some time.
As a starting point, we are looking at a virtual assistant sitting in your smartphone. Arbo was our first initiative in that direction which we launched about eight to nine months ago that measures and accumulates your usage and makes suggestions based on that. We are looking at Arbo to become a hub in your home eventually.
How do sales compare in online versus offline channels?
Online is small at this point. For the organisation, it would be 5-5.5%. In appliances, it would be close to 2% but is increasing rapidly.