KOLKATA: Before Kazuo Hirai took charge as the chief executive officer at Sony Corp in April with the single-point agenda of reviving the ailing consumer electronics giant, one of the first senior colleagues he met was Masaru Tamagawa, chief of Sony’s Indian operations.
India, one of the rare global markets where Sony is leading the market in large flat televisions and digital cameras, will also be one of the first countries Hirai plans to visit as Sony CEO because Sony India is a vital element in the company’s turnaround plans.
“India is becoming one of the most important market for Sony globally, is highly profitable and has potential to figure amongst the largest markets in three years,” says Tamagawa who has helped the brand triple its Indian revenues since he took charge as the managing director five years back.
Sony India now directly reports to the headquarters in Tokyo and not to Singapore, the Asia-Pacific hub-an honour enjoyed by select geographies such as the US, China and Russia.
Such is the upbeat mood in India that despite Sony estimating annual net loss of $6.4 billion for the past financial year and announcing plans to cut nearly 10,000 jobs globally, Sony India last week said it will hire 500 people this financial year.
As per company estimates, India will join the league of top five markets for the Japanese giant by 2015, sharing space with US, Japan and China. At present, Sony India figures amongst the top ten markets and contributes 5% to global revenues.
The company quotes GfK and IDC figures to claim market leadership in LED TV, large-screen (40-inch plus) LCD TV, digital camera, camcorder and, since December, in consumer laptops.
In fact, Sony India in 2010-11 touched a turnover of more than $1 billion and won the best performing subsidiary award from the parent. The company is yet to announce its results for 2011-12.
“Sony commits to reach another milestone of $2 billion mark by FY14,” says Tamagawa.
BRIC FOCUS: INDIA’S GAIN
Sony’s focus on India comes at a time when the contribution of the Brazil, Russia, India and China (BRIC) is growing in its overall pie. This chunk contributes almost half of Sony’s global revenues as the brand’s performance in matured markets like Japan, North America and the European Union lags.
The focus has also translated into growing number of Japanese executives taking charge of critical functions in Sony India. At present, there are more than 20 expats who are heading critical functions, including marketing, service and logistics at the Indian arm. Sony has also just de-merged its sales and research operations in India as two separate entities to independently drive focus on them.
CORE BUSINESSES GROWING IN INDIA
Immediately after taking charge of Sony’s global operations, Kazuo Hirai, who earlier headed Sony’s PlayStation gaming console business, announced plans to fix the company’s ailing television business and vowed to revive the brand trampled by Samsung Electronics and Apple.
But his biggest concern is his brand’s strongest point in India. While Sony’s television business posted up to $10 billion in losses globally, in India the Bravia television is one of the largest revenue contributor for the company.
Sony India head Tamagawa says, “Bravia is the flagship product category and is generating sizable amount of turnover and profit in India.” He adds that last year the Indian unit sold more than 9.5 lakh Bravia televisions, which contributes more than 35% to Sony India’s total sales.
Tamagawa says the firm will continue to focus on growth areas such as television, digital camera and laptop. Sony enjoys market leadership in all these product segments – Sony Bravia enjoys 40% share in LED TV, Cybershot has 42% share in compact digital cameras, Handycam 90% share in camcorders, and Sony Vaio 20% share in consumer laptops.
HUGE BRAND PULL
Sony enjoys a cult status in India and is conceived as a super premium brand with relatively higher pricing than competitors like LG and Samsung. It is this price positioning which has made the brand aspirational to consumers down the ages, right from transistor radio, Trinitron TV, Walkman, music systems or PlayStation.
According to market research firm DisplaySearch, Sony is well positioned in the Indian TV market with the strongest brand image and highest number of brand shops which acts to reassure consumers that the brand is doing well.
“If Sony can focus and avoid being drawn into a price game, they should survive well in India,” says DisplaySearch director (India and South Asia) Indrajit Ghosh.
Pulkit Baid, director of Kolkata’s leading durable retail chain Great Eastern Appliances, says most consumers would first enquire about a Sony product and consider another brand only if the price exceeds their budget.
Sure enough Tamagawa wants to protect Sony’s brand sanctity in India at all cost.
The company last year pumped in Rs 360 crore last year as marketing investment, which it plans to grow substantially.
Sony India, which in February changed its creative agency to Hakuhodo Percept from JWT, is launching a new campaign with Deepika Padukone for Cybershot cameras. Next in line will be Vaio laptops with Kareena Kapoor.
Tamagawa says laptop business has become a dark horse to challenge brands like Dell, Acer, Lenovo and Hewlett-Packard. He now wants to create more such dark horses.
He admits Sony India has to be little careful towards making investments for the time being due to the global stress, but that refuses to die his spirits. After all, the challenge is now to take the company to the global league.