Festive Schemes: Bane or Boon?

Market is buzzing with attractive schemes and new product launches this festive season. Top venders are all set to capitalize on festive bonanza by floating several discount and free/assured gifts offers for end users. Big giants are spending crores of rupees on advertising for marketing their offers. However, it would be interesting to know whether festive schemes are turning fruitful for venders in terms of boosting sales and revenue. Channel partners who are biting their nails on unbelievable discounts and offers (which they term as predatory pricing) by E Commerce companies, have something to comment on festive schemes.

Launching discount schemes right and left with an eye on the shopping spree that accompanies the festival season. The idea can be to cash in on the festive season by putting together a basket of offers for dealers or channel partners to boost up sales.

Though heavy discounts are usually part of the festive sales pitch, Vendors such as Dell, Samsung, Asus, Zebronics,  Prodot , etc are adopting innovative strategies and packages to cut through the clutter and grab consumer attention in a competitive market.

Festive offers—Sale Surgers

In a market like India, the festive fervor grips consumers, and purchases are made across product categories. This trend has visibly progressed from simple purchases for the home to personal indulgence and utility buying along with a heavy emphasis on elaborate festive gifting. Vendors increased focus on festival activations and consumers which are showing a heightened interest in indulging on special occasions – whether for themselves or for their loved ones. In an environment which is thriving for both brands and consumers, witnessing growth is given, allowing brands to innovate and deliver on occasions which are of significance to the consumer.

“This festive season, Dell wishes to enhance consumers’ shopping experience by offering compelling gifts  and we hope to make Dell the brand of choice when it comes to personal technology needs – be it extensive use of devices such as laptops and All-in-Ones or compact mobile devices like the Dell Venue tablets.“ said P Krishnakumar, Executive Director & General Manager, Dell India. He added “With festive spirits reaching an all-time high at this time of the year, there is a positive outlook in the market, and we are expecting it to be a successful quarter in favor of our channel partners and end customers too.”

Keeping this in mind, the festive offers are a mix of gifts which add an element of excitement to the purchase, as well as warranty extensions which complement the device chosen by the customer and offer customers peace of mind and help partners to add sparkle in their sales.

“In this festive season both the company and the sellers will get benefited from schemes. In our first month, we have sold more than 20,000 copies and have 5000 registered users. By this month we are expecting to sell more than 1 lakh. We expect the scheme to help in increase the sales of our partners during the two weeks around Diwali. The festive promotional offer is a clear indication of the company’s plans to expand in this segment. The scheme will be available for customers who buy our product from registered distributors and resellers “stats Neelam Sharma, country head sales, Prodot.

Expectations from Indian Customers

PC penetration across India continues to be at less than 10%, the Indian consumer in tier-1 and tier -2 markets are moving quickly and ably towards the digital era. A massive proportion of content consumption today takes place on mobile technological devices. Technology use has shifted from a purely content ‘give and take’ to an essential component in daily life – be it to stay connected with their worlds at all times, or to pay bills, or to store important data, or simply to learn more, every day.

The multi-functional role played by technology in people’s lives, has led customers to exhibit a demand for more from their technology companions. Brands are innovating to deliver intuitive user interfaces, versatile functions, and sleeker form factors and so on. Even though consumer technology adoption in Indian metros is plateau, there is a huge impetus coming in from T3-T5 markets where PC penetration is still very low.

Consumers who used to see the festive season as being an occasion for purchasing a new home appliance or vehicle have grown to consider technology devices as another such crucial need that must be accounted for. Keeping this in mind it is expected that demand for personal technology devices to continue to grow as Indian consumer become more tech-savvy and knowledgeable.

It is also endeavor to make the auspicious festive season even more special for Indian consumers by giving those exciting gifts with their purchase of various products. Apart from a gift on every purchase, the companies are also entitling consumer and dealers too for the registration to lucky draw through which they will get chance to win exciting prizes and there is expectation that customers will take benefit of these festive season offer.

ASUS will be rolling out multiple offers across its product line for both, partners and end users during this festive season. The company says that the details are being worked upon currently and should roll out in the coming weeks. Asus says that festive offers do help to attract a wider demographic, thus expanding customer clientele.

Roydon Cerejo, Manager, Corporate Marketing and PR at ASUS said, “We’ve had quite a good response in the past, which is why we continue to roll out interesting offers year after year. The festive season is the perfect time to increase awareness of our brand and help showcase our diverse product range.”

“We believe these offers should get people talking, thereby, spreading awareness of our brand and eventually, market share. We believe our schemes will be a win-win situation for both the, channel and end users. Special offers on certain product lines should attract new customers, which in turn drives up the sales for us and our channel partners”, he said.

Asus has recently launched its X99 series, high-end gaming motherboards which have already garnered very good response. The company says that in the coming months, market will be seeing a lot more gaming accessories from the STRIX lineup as well as a new breed of mini-PCs launching shortly.

Zebronics (Top Notch Infotronics) says that festive schemes are not only beneficial in terms of increasing revenue but it gives the much larger partner base and helped in increasing the marketing share.

Rajesh Doshi, founder and Director of Top Notch Infotronics said, “Our schemes are customized and designed for requirements of particular regions. It gives us much more flexibility to help out the partners. There are multiple local/regional schemes going on for partners, e.g. Gold, Silver, Overseas Trip etc. The schemes are volume-driven. There are many calculations for these schemes, which are structured in a way that to help promote newly introduced products from time to time and up partners’ awareness of the complete Zebronics range.”

“The consumer response to the Zebronics brand has been extremely good in general and does peak during the festivals. We make it a point to introduce innovative new products and engage with our channel partners to take advantage of the spike. We have seen a 5-10% increase in off take during the festivals earlier”, . Rajesh Doshi said.

“We have introduced some new products such as Zebronics Bliss, Zebronics Kettle and the first NFC Bluetooth speaker recently to take advantage of the festivals. Other new launches that we expect to do well with the festivals time are the additions to laptop coolers, headphones and gaming accessories lineup. Popular amongst our products as gifts are earphones, Bluetooth speakers and party speakers, media players etc. We have special price offers on some of the fastest moving products,” he said.

Chance to uplift Market Share

Festive season is a great opportunity to grab a good market share and to create a good brand value. The festive journey begins with launch new facelift products by the companies during this scheme the company will give a special thrust in increasing and strengthening the distribution network and offering a wide range of our products. The festival of Diwali will set the ball rolling for the company’s plans during the second half of the year.

Year on year, Vendors are coming up with innovative and attractive schemes for distributors and channel partners in order to encourage customers. The trend has been for buying behavior to lean towards the latter half of the year, resulting from a combination of seasonal festive purchase and attractive offers from brands.

Samsung has introduced exciting promotional offers on home appliances and audio visual products. The promotional offers include assured gifts, instant cash back, free installation and exciting service schemes to delight consumers.

Ranjivjit Singh, Senior Vice President, Corporate Marketing, South West Asia, Samsung Electronics said, “We are offering complimentary gifts such as free tablets with premium Samsung SMART TVs for customer to get state of the art interactive experience.” . Singh said that festive offers do encourage growth of business resulting in increase in sales and revenue.

“We are expecting to clock incremental sales during this festive season. With a host of celebratory offers and schemes across our product portfolio, the end of the third quarter and the beginning of the fourth quarter accounts for 40% of our annual business in the Consumer Electronics segment.” Singh said.

“Samsung has been witnessing very encouraging growth across our portfolio in consumer durables, surpassing the industry growth rate which has started reflecting in growing market shares across our product portfolio. We are expecting further increase in our market shares this festive season”, he said.

P Krishnakumar, Executive Director & General Manager, Dell India says “Purchase behavior for personal technology products varies across seasons. Like when it comes to computing, Dell targets three specific buying seasons. The first is for the school going students in the ‘Back to School’ season at the beginning of the new school term, wherein parents and students together look at purchasing technology solutions for growth and exposure for the children’s young minds. This is followed by the ‘Back to College’ season at the beginning of college semesters and for young individuals stepping into the professional world. This season sees an increased interest in personal technology from the ambitious youth, looking to stay connected to their virtual world and take it with them, wherever they go.”

The festive season sees a convergence in the plethora of audiences which vendors wishes to address. It is a consolidation of various customer segments seeking to leverage the potential of technology in their personal and professional lives, as well as to share the gift of technology with their loved ones. Naturally, this results in a larger set of customers who look to choose their devices at an auspicious occasion and vendors in favor of channel partners aims at doing  to ensure the feeling  of brand’s presence in consumers lives through occasions which are close to their hearts, thereby taking part in the festive cheer with them.

Adding to the festive fervor, Sony India has announced a range of exciting promotional offers on BRAVIA TVs and Alpha range of cameras. As part of the festive season promotional offers, company has announced free gifts, including Blu-ray players, wireless headphones, PlayStation, SmartWatch, and memory cards, on purchase of Sony products to customers.

Commenting on festive season schemes, Sunil Nayyar, Head, Sales, Sony India said, “2014 has been a great year for Sony India with the launch of several exciting and innovative products across categories. We believe that the festive offers will further accelerate, coupled with the positive market sentiment from a resurgent economy.”

“We are confident of achieving our sales forecast of `5,100 crore for the festive season (Aug to Nov’14), a growth of 25% over corresponding period last year. We will be investing a significant sum of `250 crore towards marketing activities to support the festive season campaign”, he said.

Sony has also come up with special finance offer with Bajaj Finserv `1,999/- down-payment, with an option of 24/6 EMI. The company has announced special EMI offer on purchase of BRAVIA TVs as per screen size along with 5% cash back offer on purchase of above  18,000 through Standard Chartered cards.

Vishal Parekh, Marketing Director, Kingston Technology - India said, “Kingston is a channel friendly company and we work closely with our partners to introduce attractive offers for the market. Channel has always been our 1st priority and they are the first ones to receive information of our products like the prices and availability. Our engagements with the end user happen through our channel network and hence most of the benefits lie with them. We also get to reach out to a larger audience through a channel network.”

Vishal Parekh, marketing director, Kingston Technology – India festive offers prove to be a win-win for partners, customers and for the company.

“Every festive season gets us a very good spike in sales and going by the market situation this time, we expect a 35% to 40% rise in our overall sales. It is not only about the positive business we do but also the channel relations we build and nurture during this time”, he said.

This festive season Kingston has much more to offer in terms of variety like the DataTraveler microDuo USB drives for the smartphones, high speed drives like the DataTraveler Mini and DataTraveler G4, more affordable SSDs like HyperX Fury and an entirely new technology (DDR4). The company is introducing a limited edition 16GB gold-plated USB drive with the picture of Lord Ganesha engraved on it. It has also planned some exciting discounts for the rest of the festive season which you will soon see buzz for it.

Schemes for distributors

In a bid to enable partners to maximize their profitability during the festive season, Brands announce various deals and offers which are aimed at engaging and energizing the consumer retail channel on Dell’s Consumer range of products and services.

This retail program is designed directly to engage with the retail channel to help them get the most out of the festive season. The program also strives to empower partners with additional sales support to maximize their profitability and ensure high levels of customer satisfaction Likewise Dell’s widespread channel network of 6000+ partners is a crucial component of the India Consumer business operations and  initiative was aimed at strengthening this solidarity.

P Krishnakumar, executive director & General Manager, Dell India adds “The month-long program involved a channel outreach program driven by a core Dell team, consisting of 200+ Dell team members from the Consumer and Small Business team who will engage with retail channel partners, in over 50 cities across 18 states, in 30 days. Dell planned to extend this outreach to 2000+ retailers in 1800 retail outlets across India”.

Vendors strongly believe that their growth has been a result of strong channel network and aggressively consolidate  channel presence .Festive Scheme are designed to reward partners who have been a constant support to vendors and want that their partners to capitalize on the brand value and win gifts for their hard work.

Smart Link says that festive offers proving beneficial to increase market share and partners base especially in upcountry and non-metro locations as they excite channel and customers who in turn stock more and push for sellout.

Rajan Sharma, VP, sales, DIGILITE said, “We have ongoing festival offers for our bay trail products DL-D1800B-ITX & DL-D1800M. Our sellout on this models have increased by >200% since we launched this scheme.”

“Previous year customers were very happy with our Gold Coin, Foreign Trip schemes. We expect same result this year as well. Customers are evolving and they are looking at vendors who have suitable and proper post sales network and whose distribution structure and supply chain is time tested”, he said.

Channel Partners Endorse the Schemes?

Channel partners drive business growth, innovation and gives rise to network. Engaging with partners to label fresh market segments, nourish customer services, individualize offerings or solutions introduce the market with key technologies and add a lasting competitive edge.

Channel partners and dealers help market to deliver powerful solutions to customers while speeding the revenue which also open more doors, close more sales and fetch more market share.

Varanasi based Computer Print headed by Vishal Gupta deals in consumable and Hardware such as Laptop, Desktop, Printers, Keyboard, Mouse, Speakers, Antivirus, USB Drive etc. The company served in the IT industry for the last 18 years. The annual turnover of the company is `2.4 to 2.5 Crore. VIshal says, “Schemes help us to capitalize the opportunity of festivals and to increase the sales of products”. Rohit Saraf , Saraf Marketing, Guwahati adds “With this festive season we are expecting a good growth although there is a downfall in the market around”.

The company always launched several schemes many festive schemes this year. The core objective of these schemes is to capitalize this opportunity of festivals and to increase the sales of their product .This year expected growth is around 20% to 22% for this month with the introduction of festive schemes.

“From last 18 years, we earned only customers and thus we have widest network of 70 retailers and 350 suppliers know us by our name” adds Kolkata based  Ranjeet Kumar, Ridhi Computers.

Sandeep Sethi, vast computers , Punjab said, “schemes really helps in generating sales and also increase customer base.”

Although vendors claim that their attractive offers are capable enough to pull customers towards showrooms, many partners and distributors across the country feel that these schemes do not have much impact on their profit margins and sales.

Offers for Customers, What Partners Gain?

Bimal Jhaveri, director of Mumbai based Hardtrac Computer Services says that big vendors like HP, Dell, Lenovo announce offers directly for end users during festivals like Diwali. These schemes might be beneficial for customers if they get extended warranty but partners hardly gain something out of it.

“Indian customers are pushed by festive offers. It is a normal tendency of customers to buy electronics products during festivals. Festive schemes do help to something additional but partners do not get much from it. However, festive offers do help partners to connect with more customers,” he said.

Jhaveri pointed out that online giants like Flipkart and Snapdeal are spending crores of rupees on marketing their discount offers. He demanded vendors to look into this serious issue where small retailers are facing difficulties to stand in a competition.

Paresh Ajmera, owner of Rajkot based Delta Systems & Peripherals says that festive offers are good in terms of accelerating sales, however, vendors should keep their schemes simple.

He said, “Vendors should come up with good warranty schemes. There should be easy registration to avail offers. Most of the times customers are not aware of such schemes.”

“Reseller educates customers but festive schemes do not impact our turnover in terms of revenue. On the other hand if any customer does not get services as promised by vendors they get angry on us. Dealers are not interested in schemes as they do not have any direct role in it.”

No tangible benefit to dealers

Jitendra Sahuji owner of Aurangabad based Sun Tech Computers says in a world of neck to neck competition, festive schemes are essential to retain customers. However, overall business of partners remains same. Only thing is such offers help them to close orders early. But there is no tangible benefit for them.”

He said that vendors should make it sure that customers avail their offers and buy from stores instead of surfing on online portals.

Unnat Mehta, director of Reet Enterprise says that partners do not get anything from festive schemes.

He said, “Majority of partners discount the schemes. They do not get extra in terms of revenue. Even I don’t think that these schemes benefit end users unless they give extended warranty to them.”

Murugappa of Chennai based sub distributor Computer Waves says that festive schemes do increase their sales during festivals but not more.

Online portals snatching customers

Rajesh Kshatriya owner of Nashik based Kshtriya Computers says that vendors should think about dealers who maximize their business and online warranty should be stopped immediately.

He said, “Very few vendors have announced offers for dealers. However, national distributors (NDs) and regional distributors (RDs) are getting major benefits. Companies give offers on target to dealers but there is no value addition in the schemes.”

“Small retailers are in trouble because of online trading sites and their 80 per cent revenue is falling due to customers increasing inclination towards online shopping. Vendors should take steps to stop predatory pricing by E Commerce sites”, he said.

Azharuddin Tamboli owner of Pune based Notebook Hub says festive offers are beneficial to customers, however, vendors and distributors should market their schemes in proper manner.

“Despite retailers give better offers to customers they go to online portals. That’s hampering our business. Vendors should make customers aware about their schemes”, he said.

It can be concluded that though majority of partners do not see festive offers a major motivation for business turnover but festive schemes do encourage end users to lighten their pockets. In a scenario where there is slow down in the industry, festive season can be a driving force for end users to rush the stores. Considering fears of channel about marketing policies of online portals disrupting business of dealers, vendors should educate partners and assist them to promote their schemes among customers.

Priyanka Pugaokar and Khushi Raj

(priyankapu@cybermedia.co.in and rajbala@cybermedia.co.in)