A White Hot Feeling

They came, they saw, but how many of them ended up conquerors? Nearly a decade after global consumer durables giants began parading their wares in India, the verdict is clear—more than anyone else, the Koreans got it right. Hot knife and butter: that's what Samsung and LG's interaction with the Indian market has been like. And these are brands that were far less known in India than, say, a Sony or a Panasonic, or local ones like BPL, Onida and Videocon.

Says Ravinder Zutshi, director, Samsung India Electronics, the first Indian recruit to the company: "The brand recall in 1995—when Samsung came to India—was zero, and Korean products were looked upon as cheap and of poor quality." But the company saw the consumer's unfamiliarity with the brand as an opportunity rather than a problem. Since the consumer didn't know too much about Samsung, Zutshi explains, "we could shape his perceptions as we wished". In fact, Samsung launched an aggressive ad campaign during those initial days—the copy read thus: "If you don't want the world's best you can go in for a Sony, Panasonic or Philips". Today, in all the product markets they operate in, Samsung and LG are either the top brands or rapidly edging towards the top two slots.

Now for some numbers. While LG's turnover has grown by over 25 times to Rs 3,300 crore in the last five years, Samsung's has multiplied nearly 20 times in the last seven years to almost Rs 3,000 crore. LG is the leader in colour TVs and washing machines. Samsung is a close No. 2 in CTVs, catching up fast in other categories. And while the market shares of several other brands are falling, for them it's growing by the month.

To Korean chutzpah, now add commitment to India. Over the six years he has spent here, Kwang-Ro-Kim, MD of LG Electronics, has been to even small towns like Hissar, and sensitive places like Srinagar to sell that extra colour TV or washing machine. As an aggressive Kim puts it: "I respect European and Japanese brands as you respect your grandfather. But grandchildren are always stronger than the forefathers." When you remind him that competitors too are reinventing themselves, he jumps up from his seat, does some spot jogging, sits downs, smiles and adds, "Your grandfather can keep himself fit. But for how long? We are younger brands with a greater appetite for risk."

So, how did the Koreans manage it? What did it take them to conquer the Indian market? The Koreans were clear they were here to woo the Indian consumer, that they wanted to become mass players, and that their entire strategy would be India-centric. As Kim says: "Only the young can adapt," and before you knew it the Koreans were everywhere. For example, they came up with an entire gamut of electronic products in the consumer durables market. Explains Rajeev Karwal, who headed LG's marketing, and is now MD of Electrolux India: "It was their range that gave them good shelf space."

Zutshi agrees that a presence in all categories ensured greater consumer commitment. "In India, the consumer is so emotionally attached to products that he tends to buy the same brand over and over again. That's why 45 per cent of our customers are repeats," he says. But didn't competitors follow the same strategy?

They did. However, the Koreans went a step further. They made huge investments in R&D to build India-specific products. For example, Samsung realised that Indians liked loud noise emanating out of their TVs. So it introduced the woofer sound technology. LG made its products a bit stronger since the bad road conditions could damage lighter versions. The two companies have invested over Rs 500 crore each in India.

The Korean products were also available at every price point. Says Arun Mahajan, branch director, Mudra: "They made the Indians feel that they were buying a foreign product at Indian prices.By plugging in that extra feature they managed to satisfy the marginal craving of the consumer as well." From Bio-rays to Golden Eye, the Koreans spoke of technology that directly benefited the consumer. And at affordable prices. Unlike a number of Japanese firms which are still talking of quality at a premium.

Some of them like Sony dismiss any comparison with the Koreans. Explains Keiichi Sakamoto, MD, Sony India, "We are not comparable because our product portfolio is very different. We have not succumbed to the pressures to cater to the high volume, low value-add mass market." In contrast, both LG and Samsung somehow straddled their products between the high-priced Japanese and the low-priced Indian brands to woo the entire range of customers.

According to R.K. Caprihan, former deputy MD of Samsung, the company realised that dealers would play an important role in attracting buyers. So, it began to operate through direct dealers, rather than distributors. Even dealers were selected on the basis of their past experience; one of the eligibility clauses was that they should have earlier worked for competitors like Philips, Sony or BPL.

To further get the dealers on their side, the Koreans charged them a small deposit, unlike the huge amounts insisted on by their competitors. Caprihan says dealers were treated more like partners. In the early days, when the company had minor problems with supplies, it gave dealers an interest on their advance deposits. And ceos like Kim kept in regular touch with the dealer base by constantly travelling across India.

All these initiatives were obviously backed by aggressive advertising. In fact, industry sources feel the Koreans were able to mostly seduce the Indian consumer with hype. Take the case of the advertising blitzkrieg during the cricket World Cup that put even the cola campaigns to shame. As a Delhi-based media planner admits, when you splash huge sums of money, it's bound to make a mark somewhere.

But, says Jagdeep Kapoor of Samsika Consultants: "The question is not how much they spent, but how well they spent their money." Adds Balki Balakrishnan, national creative director at Lowe, "The Koreans are not given to hammering out things, they would rather lead consumers than follow them." He adds that the Koreans take decisions very fast. When LG decided to sign on all the cricket captains during the last World Cup, it was not a strategy worked on for two years. "Once they are excited about something, they realise wasting time will cost them more than actually going out and spending the money," says Balakrishnan.

That's the kind of day-to-day aggression and localisation of thought that has got the Koreans where they are today: on a growth curve. As a marketing consultant puts it, "The Koreans have not flirted with India but have stayed married to it." But has the honeymoon period lasted too long? And will competition make a dent into the Koreans' rising marketshares? The truth is that players like Electrolux and Sony are seriously trying to make a comeback. "In the life history of a brand, 7-8 years is nothing. They (the Koreans) will have to show their character over a longer period," says Electrolux's Karwal, who is now fighting his former company in the market every day. At the moment, though, the chaebols are on a roll.