India's Most Influential Business and Economy Magazine - A Planman Media Initiative 
 Search  
  Other Sections
  
  • Home
  
  •  Cover Story
  •  B&E This Fortnight
  •  B&E Indicators
  • BE Corporation
  • Columnist
  • Exclusive Column
  • Finance
  • Governance
  • In Focus
  • Overseas Talk
  • Policy
  • Scrutiny
  • Sector
  • Snapshot
  • Special Feature
  • Stratagem
  • Strategic Focus
  • Testimonial
 


Share |
BE Corporation
 
Go to Page Number - 1   2   
SONY INDIA: GROWTH STRATEGY
Sony’s (Intelligent?) bet on The Idiot Box
Sony India has been Focussing Big Time on its Television Business in India. And it seems to have paid it off well. But then, it will Certainly have to come with Some Innovative Strategies soon if it wants to continue rising up The Ranks.
Issue Date - 23/06/2011
 
“It’s a time of transition, which makes things even more difficult”. These words from Osamu Katayama’s book These are our future (which details Sony Corporation’s recent history) aptly describe the phase that this Japanese multinational is going through at the moment. First, a devastating earthquake in Japan. Then, a cyber-attack on its network. And finally, a colossal net loss of $3.1 billion for the financial year ending March 31, 2011 (Sony’s second worst financial performance ever). All this has not only made its share price tumble over 25% since the turn of the year, but has also put an enormous pressure on its chief executive Howard Stringer who is striving hard to win the battle against the odds, one after the other.

In fact, when Howard Stringer, Chairman, CEO & President, Sony Corporation, took over the reins of this Japanese conglomerate in June 2005, its three major businesses – gaming, mobile phones and television – were already losing momentum, globally. Thus, the task ahead for Stringer was not only to save these businesses from collapsing, but also identify functions and markets that could serve as alternative sources of revenue for Sony, at least till the time these businesses were back on track, live and kicking.

Although Sony had been in India since 1994, it was only then that the Indian consumers saw Sony recognising the real potential of this ‘Asian Tiger’. Thus, everything from more launches, slightly more affordable prices, to more stores, to even zero-interest finance schemes, to things which Sony had never done before, were all suddenly happening, and not just in India, but across the globe. Result: Sony’s CPD division, which sells televisions, digital imaging, audio and video products, semiconductors, components and business services, recorded a respectable profit of $35.4 million in FY2010-11, up 1.6% y-o-y, at a time when the core divisions were bleeding losses.

No doubt, the strategy paid it off well across countries, but then India seems to be special, so much so that the company is now looking at the country as a priority market and expects it to become the fourth largest market for its products in the world, contributing as much as 10% to the group’s sales in the next couple of years. In fact, Sony, which started off slow in the Indian market, is now rising up fast in a market dominated by chaebols like LG and Samsung.

Cut to the chase, the focus for the time being is on its television business, particularly the Flat Panel Display (FPD) TV market in India. In fact, as per the US-based market research firm DisplaySearch, Sony has already overtaken Samsung Electronics and LG Electronics for the top position, with 22.1% of flat panel TVs shipped in the Indian market in 2010. Even according to the GFK Nielsen Urban India Panel TV (LCD + Plasma TV) Report (for April-June 2010 period), Sony Bravia (Sony’s flagship FPD product) had become the market leader in Flat Panel Display segment in the first quarter of FY2010. It had grabbed a market share of 32% by value, and 29.5% by units sold. The company had sold more than 1,00,000 units during this quarter, more than the number of units sold by any other brand in the market. For the month of June alone, Sony had captured a significant market share, 33% by value and 29.5% by units. The company reported maximum sales in the states of Maharashtra, Delhi, Tamil Nadu & West Bengal during this quarter. For starters, under the FPD TV market, the 22-inch, 32-inch & 40-42 inch segment comprises of more than 75% of LCD units sold in the country. And interestingly, Bravia was the leader in all the three categories.

 
By October 2010, Bravia had occupied 33.7% of the market share (as per the reports released by GFK). During the first half of FY 2010, Sony India had registered an overall sales figure of Rs.26 billion, a whopping 46% growth over the same period last year. What’s more? Bravia’s sales alone had registered a 65% growth in the first half of FY 2010 over the same period last year. Some of the strategies that were responsible for this superlative growth were sales channel expansion by Sony India, enhancement of its service operation, aggressive brand promotion and timely new product launches.

In fact, Sony had increased the number of its sales channels in India from 3,000 in September 2009 to 4,000 by September 2010, a whopping 33.3% increase in just one year. In addition to that, customer touch points were also increased and their number stood at 270 by the end of 2010 (Sony had 234 touch points in the country in December 2009). “India is amongst the top 10 priority markets for Sony and thus, we eagerly look forward to expanding our operations here. Relentless commitment to quality, continuous dedication to customer satisfaction and unparalleled standards of service is what differentiates us from countless competitors and reflects the true image of all that is Sony,” reasons Masaru Tamagawa, Managing Director, Sony India.

By December 2010, Sony claimed to have its footprint across all major towns and cities in the country through a distribution network comprising of over 5,000 dealers and distributors, 270 exclusive Sony outlets and 19 direct branch locations. This, the company states, was in addition to a strong service presence across the country with 22 company owned, 212 authorised service centres and 18 exclusive demonstration centers. In the meantime, the market for FPD TV was on a steady rise. Agrees Indrajit Ghosh, Director, India & South Asia Research, DisplaySearch as he tells B&E, “With a booming economy, rising discretionary income and an easy availability of loans, the Indian FPD TV market remains lucrative for consumer durables players in the near future.”

According to the recent research on Indian TV Market, the Indian flat panel TV market outlook is promising, with the region accounting for more than 30% of the total Asia Pacific FPD TV shipments forecast for 2013. Though FPD TV shipment growth in India has slowed to 80% from 100% growth in the last four years, it still remains impressive when compared with other regions. “In a global economy where several regions are saturating, India represents one of the biggest populations with the biggest potential for ensuring continued growth in the FPD TV industry,” says Ghosh.

Quoting data from the DisplaySearch report, he adds, “India aims to position itself as the next TV assembly and manufacturing destination. The Indian government also has reduced panel import duty by 50% in an effort to help attract TV manufacturing and assembly within the country. As a result, global OEMs are now considering India as their next manufacturing base.”

          

Share |
 
Go to Page Number - 1   2        Next
 


      
Comments   
   
      
Leave your first comment

   


     Leave Comments to this story    
     
Name:  
Comments:  
Email id:  
City:  
 
 
Busines & Economy is also associated with :
©Copyright 2008, Planman Media Pvt. Ltd. An Arindam Chaudhuri Initiative. With Intellectual Support from IIPM & Malay Chaudhuri.