(Published in Aurora Magazine, March-April, 2009)
By Jahanzaib Haque
How often does one consider buying a fridge? A washing machine? A microwave?
The electronic appliance industry is one where we, as consumers spend little time thinking about such purchases on a regular basis. Technological innovation aside, these items are bought specifically to last for as long as possible, be hassle free and serve our everyday needs.
As such, one would believe the typical Pakistani compulsion to aim for a trusted, international brand would reign supreme, as is seen across the electronics industry in general.
Surprisingly, the opposite holds true in the world of electronic appliances. Local brands like Dawlance, Nobel, Pel and Waves are comfortably holding their own, if not dominating the likes of LG, Philips, Samsung and Sony. So what gives these local brands a competitive edge over their multinational counterparts?
The first step towards formulating a winning strategy was the pricing. Entering into the television set market in the 90’s, Nobel gained enormous ground by offering its TV sets at 40 to 50% lower compared to the prices offered by global brands. Nobel today holds 33% of the market (ahead of both Philips and Sony), and while a cheaper product is generally thought to be inferior t, Nobel has won out by delivering goods at a level where the bang for the buck was worth the perceived risk.
Later this strategy was slightly modified, as Aqeel Lotia, Branch Director at Nobel explains.
“Over time we changed from being a price brand to a value brand. We started offering the same features found in the high-end global brands, but at a price most people could afford. Now the price gap between us and the global brands is only five to seven percent because they were forced to lower their prices.”
Dawlance, Pel and Waves have also deployed similar strategies. Syed Hasan Jameel, Marketing Head at Dawlance says the price game has to be played from a position of strength and not just in terms of control over product quality, but in terms of perception.
“If we think of ourselves as cheap, then consumers will consider us cheap. At Dawlance, our philosophy is to identify what consumers want and then raise the bar above the international brands. We even have a number of products priced higher than the international brands. If you can explain to the customer why your product is different and how it is relevant, you can charge any amount.”
Similarly, Zubair Ahmed, xyz at Waves says the company’s slogan, ‘Naam hi Kafi Haey’ was formulated to help gain consumer acceptability of the brand as a high quality, durable and affordable product.
While pricing strategies may help in capturing market shares, a major element that has helped local brands maintain a loyal customer base has been the after sales service.
With 50 years of experience under its belt, Pel was among the first to establish a large-scale dealership and after sales service network, reaching into cities and towns where global brands could not provide adequate service.
Similarly Dawlance, Nobel and Waves all have product service networks extending across the country, offering parts at far cheaper rates than their global counterparts. Nobel took this form of value addition to the next level, by offering to replace TV sets brought to their service centres.
According to Lotia “in the past, companies like Panasonic or Sony had such a monopoly, they did not care too much about customer service. A TV could lie around for days or even weeks as parts waiting for the part to shipped in from abroad. We took a big plunge at that time and said bring in your television and we will exchange it.”
However apart from pricing and after-sales service, the fine art of trekking through the quagmire of desi wants and desires and returning with a clear understanding of the consumer is where the market has been won.
Unlike global brands which receive their directives from abroad, the local appliance brands can be constantly at the edge in terms of analysing and responding to the local market.
Dawlance, which is perhaps the largest appliance company in terms of volume and revenue, has dedicated itself to this task. Examples of innovation include the production of microwave ovens with one-touch cook settings for desi dishes, and the introduction of short-height, wide-body fridges to compensate for the shorter height of most Pakistani housewives.
Waves, which sprung up in 1979 as a strong contender in the deep freezer segment has similar stories to tell. When the average Pakistani was lacking in buying power, Waves launched ‘Triplet’ Freezers integrating fridges and freezers into one affordable unit.
Recently, with power cuts in full swing, Waves launched its ‘cool bank’ freezers and refrigerators, which can retain cooling temperatures for four to five hours without electricity. Pel too has not only continued to innovate, it has also expanded into producing generators given the frequent power outages consumer’s face.
Staying just as sharp in the TV set segment, Nobel holds onto vast segments of the lower end of the market by correctly assessing that the majority of Pakistanis are not ready to cross over to new technology such as flat panels, which is where global brands are focusing.
By controlling these elements of business, local brands look set to maintain a hold over the industry in the future.
Nobel’s now aims to offer up 40% of the company’s shares in the Karachi Stock Exchange as a full-fledged public limited company. Lotia says such a move will not only serve to demonstrate that the company is ready to give something back to the people of Pakistan, it will also help to build Nobel into a truly national institution, comparable to any multinational in terms of investments.
Homaeer Waheed, General Manager, Manufacturing at Pel says the company is now exporting its products to Afghanistan and Bangladesh as well as certain countries in Africa – a direction which Dawlance is also keen on taking.
The big question which now faces the local appliance brands is less on how to effectively compete with the international brands, and more about how to localise the manufacture of the necessary components for their products as well as in deciding which direction they wish to drive the market.