MIRC Electronics MD Vijay Mansukhani
MIRC Electronics MD Vijay Mansukhani

Through the years in consumer durable industry, we have seen ACs coming in as 7th priority behind Fans, Mixer-Grinders, TV, Refrigerators, Air Coolers, Washing Machines in that order, in consumer purchasing need-set. Also, India has been one of the lowest AC penetrated the market, with close to 8% of AC penetration. Although India’s market is still only one-tenth of the Chinese room air conditioner (RAC) market, its market growth in last year was remarkable with sales of 5.2 million units, with a high increase in population and a high potential for economic growth.

With hotter summer creating hotter demand in ACs, improving macro-economic conditions and consumer’s increasing disposable incomes, cheaper financing options, development of smarter cities, greater product availability with the expansion of electrification, this year is expected to make a dent in the AC market. Also, brands are coming up with higher energy-efficient options and new features suitable for Indian conditions helping faster adoption. India is likely to grow at 12-15% in the next couple of years compared to the global growth rate of 8.5% led by the factors mentioned. Split AC will continue to grow it’s part of the pie from the current 85%, with inverter ACs which are currently almost one-third of the pie, to increase to almost half in volumes by 2020.

The industry including is continuously putting consumer interest in front while researching the latest market movers and shakers. In the past, was the first to identify and address the need for instant cooling and to measure actual savings, first to launch pre-cool SMS AC, launch ‘My Favorite, and to launch Air-Conditioners with Wi-Fi and App control. These topline features have then been widely used by other players and have gained acceptance in the market too.

Hot summer is creating hotter demand in ACs. (Photo: Agency)
Hot summer is creating hotter demand in ACs. (Photo: Agency)

The question then arises is can we do something more innovative to solve consumer problems? The answer lies in controlling your AC through by your voice. Globally, data shows 41% of people who own a voice-activated speaker say it feels like talking to a friend of another person and also by 2022, the trend shows 80% of our interactions with devices will be non-touch. More importantly, 50% of the searches will be via voice by 2020.

In line with the trend, we have meticulously worked on our in-house ViOT technology which helps the consumer to control AC with only his/her own voice through Amazon’s Alexa app and gives a frictionless human interaction, addressing the convenience and hassle-free needs of the consumers. Also, recognizing the need for families to get more value from the AC in terms of the cooling capacity, we have also launched magnified cooling technology with multiplier inverter technology which delivers 120% higher cooling than the rated capacity. We have set our eyes on a bumper sale through our thousands of offline partners and e-commerce partners such as Amazon.com.

It’s encouraging to see industry along with channel partners investing in educating the customer on the advantages of inverter vs. non-inverter ACs and also the importance of power saving/cooling capacities along with smart ACs which seem to be the flavour of this season. Since this category is medium to high involvement category, we also have taken steps of reaching out to consumers in form of infographic videos, blogs, how-to and unboxing videos talking on the things to look out for while buying an AC and elaborating on how to operate smart ACs via Alexa.

Innovation is and would be a way forward in this category, with players who invest a lot in R&D and consumer research winning the day. We always endeavour to listen to the consumer chatter and invest in the best-of-the-lot products which will solve customer’s problems. Slowly, we have seen the industry’s marketing strategies moving from mass advertising to personalized targeting & selling, and recently more into a more educative and consultative approach to selling ACs – exactly what customers need.

Expecting a very robust season ahead, with AC sales already picking up from the last month due to soaring temperatures. From 5.2 million units in FY 18, the AC market is expected to jump to 7.7 Mn units by FY 20% with a CAGR of 15% indicated our internal estimates.

From 5.2 million units in FY 18, the AC market is expected to jump to 7.7 million units by FY 2020
From 5.2 million units in FY 18, the AC market is expected to jump to 7.7 million units by FY 2020. (Photo: MIRC Electronics)

Also, split AC acceptance has been increasing throughout the year.

Split AC acceptance has been increasing. (Photo: MIRC Electronics)
Split AC acceptance has been increasing. (Photo: MIRC Electronics)

In terms of marketing spends, TV remains the lead medium, the Print pie is shrinking Digital are growing in leaps & bounce. Additionally, 10 to 15% is invested in partnership or association elements. We estimated around 320-350 crores was spent in advertising in the AC category in the last AC season. Out of which around 50% was spent on TV, around 30% on print, rest spent on radio and digital. 2019 summer season is critical for all brands, with a lot of clutter there in the advertising space. We have seen close competition within brands, with top 4 brands having 11%-12% market share.

The target group has been primarily male in AC buying decisions, with young females playing a critical role too in purchase decisions. They are well informed, research on the net, and take efforts to find out the right product with a greener footprint. On salaried class, the pool includes everyone from a corporate joiner to a mid-level climber to a seasoned professional. Although we have been pretty happy to note that tier – III and IV towns buyers also purchasing ACs a lot due to the increase in the rural farm incomes and an increase in temperature.

The author is Managing Director MIRC Electronics. Views are personal.

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