Circia 2001: A flashback to the US$ 4 million air-conditioner industry in India.
The new leaders in the Indian cooling market were the charismatic and international LG, Samsung and the all-American Carrier. The homegrown warriors (Voltas and Blue Star), with more than thirty years of local expertise, were attempting a spirited comeback. Not to forget the villains of the drama were the unorganized and unbranded sector with nearly 25% of the market.
The Government of India, with its adverse taxation policies (an excise duty of 32% and an import duty of 35%) nearly doubled the cost of any branded air-conditioner. And the ubiquitous Rain Gods that lashed the country, naturally mitigating the summer heat, ate away the potential sales.
In this action packed drama entered the Japanese novice, Daikin a premium split air conditioner. It was internationally known as a flawless, well-engineered product but it was unheard of, unproved and untried in India.
An additional factor that had to be kept in mind was the considerable price premium at which Daikin was pegged (more than 25%); this too in a market traditionally known for its frugality, and where for the most part, an air conditioner itself was a luxury. And here was a brand, which was not only marketing a “luxury” product but had the temerity to price it even higher than other brands, making the task of rationalizing the purchase so much more difficult for the consumer.
The challenge, therefore, was not only to create the consumer’s preference for this 12th brand of air-conditioner in the country, but also to actually cajole as much as 25% premium (over the rest of the category) out of him.
QUESTION: To address this challenge, should it flash the “I am International” tag and hope that this had enough appeal to lure him? A number of big global brands like Ray-Ban, Kellogg’s and KFC had tried this route without much success! Or, should it follow the International Daikin...