The big chill: LG & Voltas lay claim to the crown in the air conditioner market

Baishakhia may be elated with his brand's performance but the picture changes if one looks at only MBOs — which make up over 85% of the AC market in India — where Voltas is an undisputed leader.

The big chill: LG & Voltas lay claim to the crown in the air conditioner market
There is something exciting about the Great India Place in Noida in the National Capital Region. It's the sixth largest mall in India, one of the more happening places to hang out, and also an unlikely arena for a brand battle between South Korean electronics major LG and Indian rival Voltas.

Saurabh Baishakhia is a frequent visitor to the Great India Place, where he prefers to head straight to an LG exclusive outlet on the second floor rather than a multi-brand electronics outlet on the third. For the business head of AC division at LG India, it makes sense. Reason: Exclusive outlets have helped the South Korean brand steal a march on its rivals.

According to the latest GfK Nielsen retail figures accessed from industry sources, LG's value market share in combined multi-brand outlets (MBOs) and exclusive brand outlets (EBOs) stood at 19.7 per cent in March this year as against 16.7 per cent of Voltas. In terms of units sold in MBOs and EBOs, LG logged in 58,000 and Voltas posted 52,000. While last year, the South Korean brand is leading with a 21.1 per cent value market share, in 2013 it was ahead with 22.4 per cent.

"LG has been the market leader for the last 10 years in room air-conditioners," says Baishakhia. "Not talking about leadership does not mean that one is not a leader." LG retails its ACs through 11,000 MBOs and over 2,000 EBOs in India.

Baishakhia may be elated with his brand's performance but the picture changes drastically if one looks at only MBOs — which make up over 85 per cent of the AC market in India — where Voltas is an undisputed leader.

Just a few metres away from the LG exclusive outlet is Reliance Digital, an electronics multi-brand retail chain. On display, amongst a host of consumer electronics and durables labels, are six variants of Voltas ACs; LG too has showcased an equal number. It's outposts like Reliance Digital that have made Voltas a dominant player in MBOs, where it had an 18.4 per cent value market share in March, with LG trailing with 16.1 per cent. In terms of numbers, in MBOs Voltas was ahead of LG by 8,000 units, selling 50,000 ACs in March.
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Pradeep Bakshi, president and COO of Voltas, says MBO sales are the sole benchmark of market share throughout the world, irrespective of which agency is doing the tracking. The concept of tracking EBOs does not exist, since by sheer definition, market share is a function of reach and counter share. "And in a single brand outlet, you cannot calculate counter share," he contends.

Bakshi claims that Voltas' "undisputed" reach in the market, strong value propositions like energy efficient ACs and all-weather ACs and after-sales service are some of the factors that have worked well for the brand.

Leadership is sometimes a subjective terminology, he says. "All brands have the right to define leadership as per their own standards, as long as it does not become a matter of convenience, in order to misrepresent the realities of the market."

As LG and Voltas slug it out over the technicalities of what ought to be considered while judging the winner, brand specialists feel LG's move to persist with exclusive stores is a step in the right direction.
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EBOs are a manifestation of focus on a single brand as opposed by MBOs which are all about variety and consumer choice-led buys, says brand strategist Harish Bijoor. "While EBOs are temples of the single brand, MBOs are ration shops that offer variety on the shelf." So while you stand apart from the clutter in an EBO format, you clutter up the clutter in an MBO, he adds.

Baishakhia explains that just when it had become a norm for most brands to jump on the multi-brand bandwagon, LG decided to take an omni-channel approach. And it has paid off handsomely, he claims. "I don't know what exclusive outlets mean to other brands, for us it's the showroom of exclusive success."
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Such showboating means little to Voltas, though. "In today's age of multi brand sales experience, both offline and online, exclusive showrooms are slowly becoming mere 'showrooms', literally," says Bakshi.

Consumers look and feel the products in exclusive showrooms, and then take the final decision in the multi-brand environment due to multiple options. Hence, the marketer's true challenge is to convert the prospective customer at the multi brand point of sale, where he is most likely to take the final decision, he feels.

Bakshi claims that Voltas not only leads in retail or secondary sales, but also has highest margin as compared to its nearest competitor. Our strength in the corporate, banking, real estate, ATM, government and SME segments is of significance, and it drives our overall leadership position, beyond retail outlets, he contends.

"All this leads to Voltas having a leading share of the primary sales in the industry, close to 24.5 per cent." Such cold facts and figures may not be enough to get LG too hot under the collar — not when it is staking a claim to overall leadership.
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