In Conversation with Sarthak Seth
First things first. Panasonic lost a lot of market with its experiment in plasma flat panel technology televisions in 2012. Even the president of the company, Kazuhiro Tsuga, admitted in a media interview that it had been a colossal mistake. How did the turnaround in 2016 happen, with Panasonic’s revenues outshining that of its competitors?
Yes, it was a tough time and considering the market and economic conditions, Panasonic global management decided to shut down its plasma business which was reeling under losses. The market verdict had been ignored at that time and our president had accepted the mistakes and single-mindedly focused on how to set everything right. Senior executives in the company accepted that one had bet wrongly – our consumers preferred the lighter, durable liquid crystal display (LCD) TVs while we insisted on plasma and that’s where it all went wrong.
Seeing our losses, it was in October 2013, the company announced that it would close down the entire operation of plasma televisions – the last of the final plasma plant shutting in Japan in the same year. The rest of the TV business was tightly regulated and as a result of that today, the company no longer sells TVs in the US and has a minimal presence in China. But here’s the thing; our idea of consolidating (as per the guidance of our president) despite the losses we were reeling under was having an effect – the TV business was gradually posting a profit because we admitted to our mistake and quickly realigned ourselves to focus on manufacturing LCD televisions. What was also done globally – and this had a positive impact in several emerging markets – was to focus equally strongly on other businesses and products while also stressing on customer service.
Accepting mistakes and moving quickly to salvage the situation allowed us to cut losses and drive Panasonic towards profitability with the commitment of providing the best products with the most upgraded technology. In India, we are one of the leaders in television market...
Yes, we made mistakes. But we also learnt from them.
India, by virtue of being so diverse, is a tricky market for companies to market their products… how critical is India to the global revenues plans of Panasonic?
India is part of Panasonic’s six strategic regions (ISAMEA, or India, South East Asia, Middle East and Asia). It is what we call, ‘high-focus’ market for the company. Though it is still maturing, our global business strategies are getting emulated for this market. This will be crucial in driving growth and profitability from India to meet the larger goal of increasing our operating profits. Steps are already being taken to chart a path in line with global strategies in India. The company has focused on tier-I, tier-II, and tier-III markets, and, therefore, all the marketing and communication strategies are aligned with this objective.
In addition, our strategy is to maintain a balance between B2B and B2C products. We have seen appreciable growth in all our segments. India is an emerging market for several industries, sectors and brands and with its campaigns like ‘Make in India’ and ‘Digital India’, companies are taking note of growth opportunities here.
Much of the growth opportunity for companies is coming from the rural consumer. Would you agree?
Rural consumer is as important as urban consumer. In fact, all our marketing and communication strategies are aligned with this objective. While the urban market is getting saturated, the rural market in India, consisting of over six lakh villages, with roughly 850 million consumers – about 70 per cent of the population in India – is the sweet spot for several companies. This is where our aspiring consumer resides – the standard of living is improving, there’s a rise in disposable incomes in this segment, there’s a desire to upgrade lifestyle… all of this is leading to increase in sales for companies like ours. A lot of our marketing strategies are aimed towards this rural, aspiring consumer.This is where our aspiring consumer resides – the standard of living is improving, there’s a rise in disposable incomes in this segment, there’s a desire to upgrade lifestyle… all of this is leading to increase in sales for companies like ours.
In mobile phones, Panasonic clocks monthly sales of Rs 120-Rs130 crore easily. Panasonic’s AC business has a market share of roughly 10 percent… the company’s television market share is also growing exponentially… has the strategy of expanding the number of products in India helped Panasonic gain more traction in the market?
More than providing a number of products, our endeavour to provide products that add value to the user experience is what has mattered for Panasonic’s growth story to happen in India. All our products are designed and marketed keeping in mind the Indian experience. Also, our products are equipped with advanced Japanese technology to enhance the experience of the consumer. Providing such products has helped us to gain traction in the market. On one end we are committed to not only serve our customers in the best possible way but also to always be on the lookout for new technologies and interesting collaborations with partners who are on the same wavelength with us. This helps us to build trust amongst consumers resulting in a growing customer base.More than providing a number of products, our endeavor to provide products that add value to the user experience is what has mattered for Panasonic’s growth story to happen in India.
What is Panasonic's focus for the Indian market in the coming two-three years? A lot of MNCs’ foremost marketing strategy including building manufacturing capabilities in India…
Our focus will be to contribute to ‘Make in India’ and provide products which add value to consumers. We are expanding appliances business in India with the launch of our refrigerator factory in Jhajjhar, Haryana. The local production of refrigerators will strengthen its R&D functions. Keeping in mind the rising demand for value-added refrigerators, our new plant will manufacture refrigerators comprising of unique features such as energy-saving, long-lasting freshness and design. In addition, we will start manufacturing air-purifiers in India. The factory will be operational starting November 2017. We made a total investment of over Rs. 300 crores in India in the last few years and are eyeing an overall revenue of Rs 10,800 crore this fiscal at a growth rate of 25 per cent.