Acer is perceived to be a low-cost brand, which has helped the brand succeed in India. S Rajendran, Chief Marketing Officer, Acer India Pvt Ltd, tells us that the Taiwan-headquartered company has always looked at providing the best value for money, and its new mantra is not market share, but profits
Q] Acer was initially positioned as a low-cost brand. Over the years, this positioning has changed. Why was this done and what is your current positioning?
We did not enter with the objective of offering the lowest prices. We said we will be the brand that offers the best value for money. This means that if I have a particular configuration in a notebook and my competition also has a similar product at a comparable price, I would offer one or two additional features at the price ensuring that the customer gets better bang for the buck. That was our positioning till the IT landscape changed dramatically with the entry of other form factors like tablets and convertibles.
As a company worldwide, we are focussed on the mass market, even though we have high-end products. This has been changing in the last few quarters, with changing buying behaviours and how we want to position ourselves as a brand. So in early 2012, our tagline became ‘Explore beyond limits’, as we realised that the computing device was now being used for content consumption rather than content creation earlier. Netbooks became a category which enabled net browsing and was not very intense on content creation. Consumers are now more individualistic and we portray ourselves as a provider of technology or solutions to individuals to help them explore their individual boundary. We portrayed the cutting edge of the product and our association with the world of sports showcased this. Our tieups with Ferrari and the Olympics went beyond the exchange of logos. In Ferrari’s case we had the world’s first carbon fibre-based notebook, the Ferrari notebook which then mapped on to a Ferrari smart phone, Ferrari TFT monitor and so on. We also provided them all the high-tech gear to enable them to run the Grand Prix. We were the exclusive hardware for the Olympics and enabled the entire network. So our positioning is not about the lowest price, but the best bang for the buck, value and it also migrates to stretching as we provide technology to the most demanding environments.
Q] What are the fundamental principles of your marketing strategy?
It is to enunciate and translate our brand term, which is breaking barriers between people and technology. We are currently trying to do this by moving away from making claims of benefits and features, and being more experience-led instead. We are coming up with a lot of new form factors, which will appeal to the customer when he is engaging with the gadget. Touch is one parameter that exemplifies this. The second parameter is how you see the product as a convertible from both rendering services as a full-fledged notebook to that of a tablet. In the last six to nine months we have invested a lot in the last mile connect with touch. We have trained our retail personnel to speak to the consumer not in terms of what the latest processor and memory is, but to understand the customers need and allow him to experience the product. We have the S7 which is thinner than an Apple Mac, but instead of painting the town with full-page ads, we want the consumer to live and experience the product instead. That fundamentally is a major shift we have made in our marketing strategy, to ensure that the promise of the product and the brand is exemplified in the last mile.
Q] How has the fluctuating rupee impacted Acer? Are we looking at price hikes this festive season?
The one characteristic common across brands in the IT hardware space is the wafer-thin margins. So any wild swing in the dollar gets reflected in the price with a latency of four to six weeks depending on the supply chain. All brands have increased prices by 6 to 8% since July. To mute this impact and make it appealing to the customer, we try to pack in better value propositions. We have also worked with banks so that our consumers get the benefit of more attractive interest rates to help them purchase our products.
Q] In the last year, Acer has lost its market share to HP and Lenovo. What is your strategy to regain your share and tackle the competition?
Talking about leadership, we did look at market share when there was certainty and the market was steady. Today the language has changed, and in our pursuit to be more relevant we have adopted one more philosophy internally, which we call ‘progressive design’. This means that all our products have a design that resonates with changing dynamics at the consumer space as well as the technology space. Also, consumers are looking to engage with gadgets in an educative manner. Since touch is becoming more pervasive, we are also adopting that technology in our entry-level notebooks. In these uncertain times, it is not about pure market share, but profitable growth too. Three years ago, when things were certain, we may have said never mind the profits, and then proceeded to do things in one quarter in pursuit of retaining market share and caught up in the next quarter. This is certainly not the orientation and rationale today.
Q] Which vertical provides the maximum traction for the brand? What is the contribution of each vertical?
We have two broad businesses: relationship and transaction. The relationship business is totally enterprisedriven, and the segments that give us traction here are the government and BFSI. On the other hand, the transaction business is based on consumer purchases, which has been choppy. It depends on sentiment, which is reflected in the footfalls and buying behaviours.
Q] What are the emerging consumer trends and future opportunities, looking ahead?
We are seeing an increasing acceptance for graphic-based gadgets, touch-based devices, conventional design and thin, light batteries that last longer. We predict the market will soon move towards using the more advanced Intel Core i3 Processors.
Q] Acer India was present in the smartphone category for a brief period. Are you looking at re-entering this space?
As far as India is concerned, smartphones aren’t priority items. In these uncertain times, we are re-orienting as a brand — we want to be experiential. Our focus will be fundamentally on computing devices which will later move to tablets.
Q] Acer has targeted $1 billion dollar revenue by the end of 2014-15. Are you in line to meet this target? What is the brand’s growth rate?
Yes, we are on track to achieve it. For Acer, India is the biggest market in the APAC region today. In terms of growth rates, while many speak of flat or negative growth for PCs and 12 to 13% growth for notebooks, we should be closer to 20%. With the consumer demand still low, our focus is on government, BFSI and even education to a certain extent.
Q] What is your current reach in India? What are your explansion plans?
We have close to 550 retail outlets (Acer Malls and Acer Points) across 70 cities. We also have branded outlets called Acer Galleries, but this is more of a Tier II and Tier III phenomena where we’re at 1,000 towns with 4,000 touch points. Our focus is not on entering more towns but in driving depth where we are already present; so my footprint may increase but not my town presence.
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