Swedish telecom giant Ericsson has undergone a global metamorphosis from a behind-the-scenes, high-technology company to a highly-visible consumer brand that today aspires to be in the same league as Nike, Sony or McDo -nald's. The company's regional
On Erisson's image: We were the cowboys of telecom. Our mainstay was providing solid, reliable equipment to state monopolies. Today, the focus has shifted from engineers to consumers. We are focusing more on marketing today. With global sales for mobile phones expected to reach 100 million in 1997, growing at 40 per cent per annum, just behind televisions and personal computers, we plan to be an active player in the handset market.
On the importance of branding:Today we spend millions of dollars on advertisements, product promotion and brand building, almost as much as we would spend on R&D. Because life is not just about pricing and distribution. It is about feeling. By branding you not only create brand preference but also influence how much people are willing to pay for a product.
On growth markets:Even in Europe, penetration of phones is only 10 per cent, also old phones are being replaced and more than one phone per person is becoming a norm. So growth is in old markets as well as new. But while Europe is rich in potential, the sleeping giants are China and India.
On the Indian experience: When the telecom race started in India, most players were far too optimistic. Now there is a growing realisation that the market would take far longer to take off. But India is not an exception. Till two-three years back, the Chinese market was just about stirring but today it is like a rocket with the offtake being 7-9 million phones. In India this year, some 500,000 phones will be sold.
On current price cuts:Those in business must realise that there must be profit in it for all players. Price cuts may bring quick bucks in the short term but in the long run they can prove to be suicidal. Business is not just about the present, it is about building future reserves. And managing customer expectations can become a liability if businessmen are too frantic.
On Ericsson's strategy:Our pricing will be international. We are not in the business of selling tomatoes. We want to be a stable supplier and not go in for a pricing-driven strategy. But at the same time India is special in terms of sensitivity to prices. That's a hard fact. In any case, strategies and policies are for the textbook. We will play by the ear and are eager to listen to our operators, partners, customers, distributors and dealers.