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Take for instance the white goods major LG. Hit by a decline in consumer spending in urban areas, this hitherto premium brand has made a paradigm shift in its strategy and is now focusing on the rural market. Not only is LG rolling out a line of entry-level products, it is also investing heavily in channel expansion and setting up services network for its rural customers. Moon Bum Shin, MD, LG Electronics India Ltd, asserts, “Our penetration in the rural markets is low, but we are taking it as a potential market for future as it is very important in terms of profit. In a span of ten years, the market anatomy for urban and rural would be really in a good balance.”

But that’s not all India Inc. is experimenting with; a host of companies are capturing the market and improving their sales in their own different ways. While for the first time ever, Maruti extended its sales season till February (instead of offering discounts only till December), big real estate players are giving unheard of freebies (getting a Mercedes free on the purchase of a penthouse is no big deal now) or even developing ultra-low budget houses to lure lower and mid-segment consumers. Even public sector banks, like SBI, which had never seen the sunnier side of marketing spends ever, have scaled up their ad investments like never before, given the general negative perception in the market about private banks.

If Kingfisher, in order to improve occupancy of its full service carriers, cut its fares by 50-60% in January 2009 (and subsequently reversed the strategy a few days later; and re-reversed it in February); Skoda Auto, which has always produced premium sedans and hatchbacks (like Fabia) have announced the launch of a small car in the range of Rs.3-5 lakhs to capture the mid and lower segments. The retail space too is seeing a few first-time strategies adopted by companies. Says Arvind Singhal, Chairman, KSA Technopak, “Reliance Industries, the promoter of Reliance Retail, has generally not been open to joint ventures and strategic alliances. Yet, for their retail start-up, very early on, they’ve started seeking partnerships.” He further adds that even Shoppers’ Stop has started to actually shut down nonviable formats, which is also a shift in their strategy. “Overall, the focus of retailers being on achieving profitability first, and then on aggressive growth, itself is a shift in strategy,” Singhal avers.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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