New Delhi, Oct 25 Planning to buy a plasma TV and a designer watch this Diwali? Then how about getting both the things at the cost of one!
With the festive season in full swing, consumer durable companies are offering expensive freebies with main products, instead of the traditional cash discounts, to push sales. The reason: Inability to lower prices any further after successive discounts.
"We are creating an excitement through new products this Diwali season," said Ruchika Batra, general manager for Southwest Asia with white goods major Samsung that is not relying on discounts to push sales this year.
"We have enhanced main products and along with that we give away some other value-added products. So the total value of the goods should hold more value for our customers than the discounts," Batra said.
The company, which logged a 25 percent growth in sales last festive season despite the difficult year it was for consumer goods giants in India, is expecting a major spike of over 40 percent this year.
Akai, another consumer durables major, also said prices have fallen so much that it was no longer possible to give more discounts. The company felt the buying power of Indian consumers had grown substantially over the past few years, needing a different strategy.
"Prices are already pretty low now; cutting it further will affect profitability and the overall image of firms," said Pranay Dhabhai, managing director of Akai India. "Exchange offers and offers on multiple product purchases work better in such circumstances."
Under the exchange offer of Akai, a customer can buy a LED TV worth Rs.55,000 for just Rs.34,999 by exchanging an old 29-inch colour TV. Smaller TVs can also be exchanged for other models at varying prices.
"We want our customers to upgrade to better products. So instead of giving flat price discounts, we are giving them an opportunity to exchange their old TV models for newer LED TVs," said Dhabhai.
Thrown in with that is a Provogue watch worth Rs.2,490 on the purchase of a LED TV.
Manish Sharma, the director of marketing at Panasonic India, shared a similar view. "The market in India today has become highly competitive. It has clearly moved ahead of price discounts. Such schemes do not offer much of a value-addition proposition."
Panasonic is offering value-added services such as a three-year warrantee and service on the purchase of its flat panel TV. Their freebie: a Benetton designer watch worth around Rs.7,800, which buyers get on the purchase of a plasma TV.
"Gifts last long; discounts don't."
What has also triggered this shift away from price discounts is the growing purchasing power of the Indian consumer and the fact that freebies and gifts are a cheaper option than outright cash discounts.
If a watch is offered free with the purchase of a TV, refrigerator or a washing machine, for the consumer it is the retail price, say Rs.4,200 or so, that actually matters. For the consumer goods major, the actual cost of the freebie is far less.
That is something executives admit privately, but are unwilling to come on record.