MARKETING

Cooling minds,
winning hearts
Backed by research and an acute awareness of
what customers are enticed by, Voltas has reclaimed
pole position in the room air-conditioner market

ndia is spoiled for choice, domestic

and foreign, when it comes to
consumer durables and its not easy
for an Indian brand to overtake
the plethora of international players
jousting for leadership. Yet Voltas
has not only managed to achieve
pole position in the domestic airconditioner market, it has also been
stretching its lead slowly.
The 19.8 percent market share
the company recorded in May
2013 based on sales volumes
in multi-brand outlets is an
improvement on the 18.4 percent
of a year back. That means Voltas
is the undisputed No 1 in the room
air-conditioning space in India. What
makes the success especially sweet
is that it comes at the end of a long
struggle, and it highlights the belief
the organisation had in its ability to
deliver wonderful products.
A veteran in the cooling
business, Voltas can trace its

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July 2013

history back to the 1960s, when it

became the first company to sell
room air conditioners in India. It
soon established its dominance in
the Indian market, but this would
disappear with the advent of South
Korean, Japanese, Chinese and other
brands in the 1990s. The business
went into the red in 1994 and, as the
years passed, matters got worse.
out of the quagmire
Something had to give, and it did.
About six to seven years ago, the
team at Voltas took a hard look
at the business to find a way out
of the quagmire. It was tough.
Truth to tell, there is no significant
differentiator in air conditioners,
neither in terms of technology nor
economies of scale in running the
supply chain, explains Sanjay Johri,
the companys managing director.
Technology is fairly commoditised
in air conditioners and this is a

challenge faced by all companies,

including Voltas.
Stiff competition and no
differentiation these challenges
led the Voltas team to look at the
possibility of differentiating its air
conditioners by creating a unique
identity for the Voltas brand.
Multinationals in the FMCG [fastmoving consumer goods companies]
are good at this, says Mr Johri.
Their whole approach to business
starts with consumer insight and
thats what drives their products,
distribution and sales. We tried to
replicate the FMCG approach.
Voltas put a lot of time and
effort into getting insights on the
customers mind and needs, and
into seeing how to make best use
of such insights. We tried to create
a differentiator in the mind of the
consumer, says Mr Johri. We were
actually fighting for mind space.
That battle, back in 2006,
unfolded at a time when
international air-conditioning brands
were using their foreign lineage as
an advertising hook to win over the
Indian populace. It was also a time
when the national economy was

MARKETING

booming, with over 9 percent growth

rates. Voltass research showed there
was a sense of pride in being Indian.
Taking that as the key factor, the
company ran with the messaging:
India ka dil, India ka AC.
The campaign featured a little
girl running up to the field to cool
down her farmer father with cold air
from a Voltas air conditioner.
It was emotional and people
remembered it. The campaign proved
to be a breakthrough, enabling the
company to gain a certain amount
of traction vis--vis other brands.
Voltas began inching its back up the
leadership ladder and it soon reached
the No 4 position.
Starry Space
Over the next few years Voltas
continued to face, and overcome,
market challenges by keeping its
focus on customer needs. In 2007,
when the cost of manufacturing air
conditioners went up because of a
hike in commodity prices, Indian
manufacturers had to take a call on
whether to absorb these costs or
increase the selling price. Voltass
research team dug deep to mine an

Sensible cooling the customer saves money, the nation saves power
important insight most customers
were concerned with not just the
unit price but also the running cost
(electricity is expensive in India).
This thought led to a turning
point for the company. Voltas
revisited its technologies and found
that it could make its air conditioners
more energy-efficient at a marginally
higher cost. Accordingly, its
marketing campaign focused on

energy efficiency and showed how a

one-time spike of `1,500 in the price
would help the customer save up to
`3,000 by the end of the year. The
campaign also had a patriotic hook:
while the customer saved money, the
nation saved on power consumption.
Our advertising budget was
quite high `200 million and
it was a tough call to make as the
business was not making money,
July 2013

Tata Review

89

MARKETING

What has really worked for Voltas is the

focus on consumer insight and creating the
campaign around that; when it all comes
together, you have your eureka moment.
Sanjay Johri, managing director, Voltas

recalls Mr Johri. But there was a

certain logic we felt would work.
And it did: the companys sales
jumped up by 41 percent in 2007-08.
By 2010, energy-efficient air
conditioners were all the rage, with
the Indian governments Ministry
of Power making it mandatory
for electrical products to display
their energy efficiency through
a star rating label. At this point
Voltas moved a step forward with
its marketing platform of sensible
cooling, which translated into using
air conditioners more responsibly so
as to save on energy bills.
The campaign had a series
of tips on how customers could
programme their air conditioners to
consume less power (by utilising, for
example, the timer and sleep-mode
features). Customers bought into this
message and Voltas soon jumped to
No 3 rank in the market.
In the summer of 2012,
Voltas started looking for a new
breakthrough idea that would help
them achieve the coveted leadership
position. The winning concept came
from the need to give the customer
something beyond just cooling.
Most people think of an air
conditioner as something that cools
the air and, consequently, usage is
concentrated in the peak summer
months, points out Mr Johri.
However, air conditioners have
features that can fulfil many other
needs, such as a dehumidifying,
which extracts moisture from the

90 Tata Review

July 2013

air. This function can be used to

dry clothes during the monsoon in
Mumbai. Delhi in the winter gets
bone-chilling cold; by adding a small
heating function, the unit can work as
a heater, too. And adding a dust filter
makes sense in places like Rajasthan.
Thus was born the Voltas
bestseller the all weather AC that
helps customers stay comfortable all
through the year, no matter what the
weather outside.
The challenge was to
communicate this in an interesting
manner, and thats where Soho Square
(erstwhile Meridian), an advertising
agency from the Ogilvy & Mather
group, stepped in. Meridian came
up with an innovative advertising
strategy, creating a character called
Mr Murthy, who would get frequently
transferred to new postings because
he did outrageous things. What
kept Mr Murthy happy through all
the disruption was his Voltas air
conditioner, which would continue
to heat or cool the house, as required,
no matter the posting. The character
clicked, especially in North India.
People remembered Voltas and
Murthy rather than the other brands,
says Mr Johri. In terms of mind share,
it has been fantastic. What has really
worked is the focus on consumer
insight. You have your eureka
moment when it all comes together.
Mr Murthy was the herald of a
wonderful milestone. Last summer,
Voltas overtook, first, Samsung and
then LG to become the leading brand

in market share. It was a proud

moment for us an Indian company
beating multinationals, much bigger
than us, with bigger pockets and a
wider range of products, says Mr
Johri. Our team has done a great job.
We had consistently shown losses
for 12 years, from 1994 to 2006.
And there were questions about us
being in the business. But the story
started changing in 2006 and now our
room air conditioners are a lucrative
business (`19 billion in revenue and
`1.7 billion in profit).
tranSformation zone
The transformation has encompassed
more than the ad space. In a leap of
modernity, the company closed down
old and outdated factories and set up
a new plant with automated assembly
lines in Pantnagar, Uttarakhand.
Supply chain and logistics have
changed, and components are
purchased from cheaper sources,
including China.
Capacity, too, was enhanced,
from 350,000 units in 2006 to the
current figure of nearly million room
air conditioners and commercial
refrigeration products (freezers,
bottle coolers, etc). Trade channels
have grown correspondingly:
exclusive sales and service dealers,
multi-brand outlets Voltas now
has about 7,000 retail points bulk
distributors and so on.
Voltass resurgence story
is a classic one. It is about how
a company banked on its core
competence to create a strong
customer connect. The market will
be keeping a close eye on Voltas to
see what tack the brand will take next
year. And Voltas will keep listening to
the voice of the consumer.
Sujata Agrawal