Financial Daily from THE HINDU group of publications
Monday, Oct 13, 2003
Marketing - Trends
Now, it's mobile phones vs durables
Mumbai , Oct. 12
POLYPHONIC ring tones, video clips, games, MMS, built-in camera, e-mail and fax compatibility ... the mobile phone consumer is spoilt for choice these days.
With the current base of over 14 million mobile phone users expected to go up to between 40 and 50 million by 2005, new players are entering the market with sophisticated products at lower prices, and the current replacement levels of 10 per cent to 15 per cent of the subscriber base is expected to rise to close to 50 per cent in a few years.
Indeed, the replacement cycle of mobile phones in some segments is down to 12 months, as consumers seek to constantly upgrade their phones.
But consumer durables makers and retailers are not exactly making a song and dance as it could seriously impact on purchases of durables in the long run.
Indeed, the mobile phone has been described as a black hole that has made obsolete, products like calculators, personal digital assistants and even cameras, but its impact on household durables purchases - while not immediate - could be more long-term, say some manufacturers.
"Mobile phones are seen as an expression of one's personality, and hi-tech phones are a status symbol that people want to be seen with," said Mr Soumitra K. Ghatak, Executive Vice President - Marketing, Sales & Service, Godrej Appliances.
"And since basic phones are priced at Rs 7,000-Rs 8,000, they do grab a share of the consumer's wallet, and could affect the replacement purchase of a refrigerator, or the second TV or AC in a house." While mobile phones will not impact first-time purchases in semi-urban and rural areas, they could impact on replacement and second purchases in the metros, he added.
The consumer typically allocates his resources to consumption (FMCGs), assets and savings; consumption is already losing out as a share of the wallet. People are also buying homes earlier, and are spending more on assets like two-wheelers and cars, according to Mr V. Chandramouli, Vice President - Sales, Marketing & Service, Mirc Electronics.
"So durables will have to fight for their share of the wallet - the question for us is whether that share will come from assets or savings."
However, others are of the opinion that consumers are comfortable paying for durables with easy-finance schemes, and are unlikely to delay purchase on account of their mobile purchases.
"Yes, the consumer's share of wallet is getting reallocated, but money will move from FMCGs to mobile phones, and not necessarily from durables," said Mr Nikhil Vora, Vice President - Research, SSKI Institutional Securities.
So this festive, is it a new mobile or another AC, or both: only time will tell.
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