Godrej Appliances has recently entered the premium market with the launch of its brand NXW. Swati Rathi, Head, Marketing, Godrej Appliances says efforts are on towards premiumization of other segments in the portfolio too
By Samarpita Banerjee
Q] It’s been around six months since Godrej Appliances’ last big launch, the NXW AC. How has the premium brand been faring so far?
It’s been going great. The AC sales this year have been good, both for the industry and for us. The climate has also supported us this year, considering it’s a seasonal category. We have been playing in the efficiency segment consistently for quite some time now. We have been able to get the right technology year-on-year which is deliberate in terms of being on the top of the energy efficiency space. This year, NXW was an icing on the cake, being a 5-star inverter AC and having the highest ISEER in the segment. If you look at the industry trend and the expectations from the coming year, this technology is going to make a big difference in the category. We are a large appliances player and not just an AC player which is the segment with the maximum clutter. There are about 37-40 brands playing in it. There are also a lot of brands that specialize in AC. For an Indian appliance brand to be able to consistently come up with technology which delivers better than some of the renowned specialist AC brands, in itself, is a big achievement.
Q] What are your expectations from NXW in the next few years? How much will it contribute to the brand overall?
If you look at the volume that a high-end segment generates in India, irrespective of all the premiumization, the volumes in comparison to mass-ends still continue to be low, so that is not really a surprise. What matters is the kind of premium that one can charge and the kind of growth that those segments deliver. NXW is not just a product series for us. We positioned it as a sub-brand and it’s deliberate. We started off with NXW refrigerators and extended it to NXW ACs. The right products will be put under the NXW sub-brand which have to be high-end, premium and have to deliver to the elite who really know the product in terms of what they want from it. And it’s expected to do the job of making the brand more premium.
Q] While it is a premium segment, the tonality of your TVC was quite young. Who is your TG?
The communication tonality of a lot of our products is younger, and that’s deliberate, keeping what we need to do at a long-term for the brand. India is a price-sensitive country, which is why the mass segments continue to rule the roost. But there is demand for premium value-added products across segments. Even while talking about a single door refrigerator, there is a clear and growing market for the premium single doors. The same trend can be seen in frost-free or washing machines. At the end of the day, an appliance is something that people know will serve them for years, and if you really give them a value-added product, they are willing to pay a premium, as we have seen to happen time and again.
Q] Innovation plays a big role at Godrej. How have you inculcated the innovation culture into your products?
One way of implementing is to keep innovating and entering into newer spaces. The other way is to innovate and improve spaces that you are already operating in. Take for example, ACs; it has taken continuous innovation from our side to be able to improve the efficiency of our products year-on-year and raise the benchmark of efficiency. That’s not possible without having an innovation quotient. Similarly, when it comes to washing machines, we have been the first brand to launch a steel drum and semi-automatic washing machine in the mass segment. It’s a big segment and within that, instead of slashing prices and operating no-frills machines, we have given a premium offering within semi-automatics knowing that there is a customer for it. And it is working beautifully. We are now the Number 2 brand in semi-automatics in a very short span of time. There is clearly scope for innovation in every segment. However, beyond the four existing categories, there are other categories too. So, we are also into medical refrigerators, which is an offering that is not really plain vanilla. Since entering the category, we have brought out relevant products with high innovation quotient.
Q] What are the products under your portfolio that gives the greatest traction to the brand? And which are the segments that you are betting on looking ahead?
The greatest traction comes from both refrigerators and air conditioners. Our bigger play has been in the cooling segments. A couple of recent innovations have done exceedingly well in washing machines and we are looking at consolidating our position in washing machines in the coming one year. We are planning a spate of launches in that category as well. We already have a lot of traction coming in from the mother but over the years, we have also built a strong equity when it comes to ACs. Looking ahead, washing machine is going to be the next category that we plan to build on. And apart from that, there are other smaller, more niche categories which are not really B2C in a big way but we are banking on them to deliver.
Q] What is your media mix and how important is the digital medium for you?
When it comes to appliances, you need to get the right balance. It’s the job of ATL media to get eyeballs and to develop a brand pull. Here, the traditional media has a big role to play. Depending on the objective that we have set out, we decide which of the traditional media to use. Digital is interesting because we have reached a stage where we don’t leave it out in any of our communications. There is a part of digital which is the continuous month-on-month, day-on-day kind of a digital connect that we build with our consumers. From where we were two years ago, there is a significant increase in our digital spends. Also, we spend a lot on BTL activations. While there is the play of building consideration using traditional media, there is also the angle of conversion happening at the shop floor. Therefore BTL activations and engagement is also fairly important for us.
Q] Considering the heritage status associated with Godrej, how do you still manage to stay contemporary?
Over the last many years now, we have been continuously investing on innovation across every category that we are operating in. It has been our endeavor to offer products that are truly relevant and to really have tangible technology. It is against our DNA to offer gimmicky technology and so we don’t use too much jargon. We deliver things that people can touch, feel, make out and have complete proof for. That has really helped consumers to understand that we are the brand which is unwilling to give up in the face of competition and that we offer things that they feel will add real value to consumers.
Q] What is the biggest challenge being faced by the appliances segment?
Given the nature of the industry, the biggest challenge is seasonality. Unfortunately, climate plays a big role in the cooling categories which is why every brand operating in the cooling category also needs to explore adjacent spaces and look at how to take care of that dependency. The other challenge is more external in nature, the currency fluctuations, the commodity because there is a lot of raw material and it’s a material intensive category. And therefore any fluctuation in raw material costs affects the segment in a big way.
Q] The growth target of Godrej appliances for FY 2016 was around 27%. Have you been able to achieve it so far?
Right now we are completely on plan. We are also looking forward to the festive season and hoping to achieve our numbers.
Q] What will be your broad marketing strategy for the next few years?
The biggest strategy for the brand is premiumization across segments. There is the play of the high-end sub-brands like NXW which are going to give the brand an overall imagery, supported by premium offerings across every segment that we operate in and not just the high-end. It’s a part of our strategy to gain more aspirational impact for the brand. Everything else is kind of a sub-set of this strategy.
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