Cooling Minds Winning Heart

8/13/2019 Cooling Minds Winning Heart

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MARKETING

Tata Review n July 201388

MARKETING

India is spoiled for choice, domesticand foreign, when it comes to

consumer durables and it’s not easy

for an Indian brand to overtake

the plethora of international players

jousting for leadership. Yet Voltas

has not only managed to achieve

pole position in the domestic air-

conditioner market, it has also been

stretching its lead slowly.

Te 19.8 percent market share

the company recorded in May

2013 — based on sales volumes

in multi-brand outlets — is an

improvement on the 18.4 percent

of a year back. Tat means Voltas

is the undisputed No 1 in the room

air-conditioning space in India. What

makes the success especially sweet

is that it comes at the end of a long

struggle, and it highlights the belief

the organisation had in its ability todeliver wonderful products.

A veteran in the cooling

business, Voltas can trace its

history back to the 1960s, when itbecame the first company to sell

room air conditioners in India. It

soon established its dominance in

the Indian market, but this would

disappear with the advent of South

Korean, Japanese, Chinese and other

brands in the 1990s. Te business

went into the red in 1994 and, as the

years passed, matters got worse.

OUT OF THE QUAGMIRE

Something had to give, and it did.

About six to seven years ago, the

team at Voltas took a hard look

at the business to find a way out

of the quagmire. It was tough.

“ruth to tell, there is no significant

differentiator in air conditioners,

neither in terms of technology nor

economies of scale in running the

supply chain,” explains Sanjay Johri,the company’s managing director.

“echnology is fairly commoditised

in air conditioners and this is a

challenge faced by all companies,

including Voltas.”

Stiff competition and no

differentiation — these challenges

led the Voltas team to look at the

possibility of differentiating its air

conditioners by creating a uniqueidentity for the Voltas brand.

“Multinationals in the FMCG [fast-

moving consumer goods companies]

are good at this,” says Mr Johri.

“Teir whole approach to business

starts with consumer insight and

that’s what drives their products,

distribution and sales. We tried to

replicate the FMCG approach.”

Voltas put a lot of time and

effort into getting insights on the

customer’s mind and needs, and

into seeing how to make best use

of such insights. “We tried to create

a differentiator in the mind of the

consumer,” says Mr Johri. “We were

actually fighting for mind space.”

Tat battle, back in 2006,

unfolded at a time when

international air-conditioning brands

were using their ‘foreign’ lineage asan advertising hook to win over the

Indian populace. It was also a time

when the national economy was

Backed by research and an acute awareness of

what customers are enticed by, Voltas has reclaimed

pole position in the room air-conditioner market

Cooling minds,

winning hearts



MARKETING

July 2013 n Tata Review 89

MARKETING

booming, with over 9 percent growth

rates. Voltas’s research showed there

was a sense of pride in being Indian.

aking that as the key factor, the

company ran with the messaging:

‘India ka dil, India ka AC ’.

Te campaign featured a littlegirl running up to the field to cool

down her farmer father with ‘cold air’

from a Voltas air conditioner.

It was emotional and people

remembered it. Te campaign proved

to be a breakthrough, enabling the

company to gain a certain amount

of traction vis-à-vis other brands.

Voltas began inching its back up the

leadership ladder and it soon reached

the No 4 position.

STARRY SPACE

Over the next few years Voltas

continued to face, and overcome,

market challenges by keeping its

focus on customer needs. In 2007,

when the cost of manufacturing air

conditioners went up because of a

hike in commodity prices, Indian

manufacturers had to take a call onwhether to absorb these costs or

increase the selling price. Voltas’s

research team dug deep to mine an

Sensible cooling — the customer saves money, the nation saves power

important insight — most customers

were concerned with not just the

unit price but also the running cost

(electricity is expensive in India).

Tis thought led to a turning

point for the company. Voltas

revisited its technologies and found

that it could make its air conditionersmore energy-efficient at a marginally

higher cost. Accordingly, its

marketing campaign focused on

energy efficiency and showed how a

one-time spike of `1,500 in the price

would help the customer save up to

`3,000 by the end of the year. Te

campaign also had a patriotic hook:

while the customer saved money, the

nation saved on power consumption.

“Our advertising budget wasquite high — `200 million — and

it was a tough call to make as the

business was not making money,”



MARKETING

Tata Review n July 201390

recalls Mr Johri. “But there was a

certain logic we felt would work.”

And it did: the company’s sales

jumped up by 41 percent in 2007-08.

By 2010, energy-efficient airconditioners were all the rage, with

the Indian government’s Ministry

of Power making it mandatory

for electrical products to display

their energy efficiency through

a ‘star rating’ label. At this point

Voltas moved a step forward with

its marketing platform of ‘sensible

cooling’, which translated into using

air conditioners more responsibly so

as to save on energy bills.Te campaign had a series

of tips on how customers could

programme their air conditioners to

consume less power (by utilising, for

example, the timer and sleep-mode

features). Customers bought into this

message and Voltas soon jumped to

No 3 rank in the market.

In the summer of 2012,

Voltas started looking for a new

breakthrough idea that would help

them achieve the coveted leadership

position. Te winning concept came

from the need to give the customer

something beyond just cooling.

“Most people think of an air

conditioner as something that cools

the air and, consequently, usage is

concentrated in the peak summer

months,” points out Mr Johri.

“However, air conditioners havefeatures that can fulfil many other

needs, such as a dehumidifying,

which extracts moisture from the

air. Tis function can be used to

dry clothes during the monsoon in

Mumbai. Delhi in the winter gets

bone-chilling cold; by adding a small

heating function, the unit can work asa heater, too. And adding a dust filter

makes sense in places like Rajasthan.

Tus was born the Voltas

bestseller — the ‘all weather AC’ that

helps customers stay comfortable all

through the year, no matter what the

weather outside.

Te challenge was to

communicate this in an interesting

manner, and that’s where Soho Square

(erstwhile Meridian), an advertisingagency from the Ogilvy & Mather

group, stepped in. Meridian came

up with an innovative advertising

strategy, creating a character called

Mr Murthy, who would get frequently

transferred to new postings because

he did outrageous things. What

kept Mr Murthy happy through all

the disruption was his Voltas air

conditioner, which would continue

to heat or cool the house, as required,

no matter the posting. Te character

clicked, especially in North India.

“People remembered Voltas and

Murthy rather than the other brands,”

says Mr Johri. In terms of mind share,

it has been fantastic. What has really

worked is the focus on consumer

insight. You have your eureka

moment when it all comes together.”

Mr Murthy was the herald of awonderful milestone. Last summer,

Voltas overtook, first, Samsung and

then LG to become the leading brand

in market share. “It was a proud

moment for us — an Indian company

beating multinationals, much bigger

than us, with bigger pockets and a

wider range of products,” says Mr

Johri. “Our team has done a great job.

We had consistently shown losses

for 12 years, from 1994 to 2006.

And there were questions about us

being in the business. But the story

started changing in 2006 and now our

room air conditioners are a lucrative

business (`

19 billion in revenue and`1.7 billion in profit).”

TRANSFORMATION ZONE

Te transformation has encompassed

more than the ad space. In a leap of

modernity, the company closed down

old and outdated factories and set up

a new plant with automated assembly

lines in Pantnagar, Uttarakhand.

Supply chain and logistics have

changed, and components arepurchased from cheaper sources,

including China.

Capacity, too, was enhanced,

from 350,000 units in 2006 to the

current figure of nearly million room

air conditioners and commercial

refrigeration products (freezers,

bottle coolers, etc). rade channels

have grown correspondingly:

exclusive sales and service dealers,

multi-brand outlets — Voltas now

has about 7,000 retail points — bulk

distributors and so on.

Voltas’s resurgence story

is a classic one. It is about how

a company banked on its core

competence to create a strong

customer connect. Te market will

be keeping a close eye on Voltas to

see what tack the brand will take next

year. And Voltas will keep listening tothe voice of the consumer.¨

— Sujata Agrawal

What has really worked for Voltas is the

focus on consumer insight and creating thecampaign around that; when it all comes

together, you have your eureka moment.

Sanjay Johri, managing director, Voltas

Documents

Cooling Minds Winning Heart