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4Ps
Meet the Sonus!
Neha Saraiya analyses in this delightful report on how Sony India reached a fantastical 25% growth... and on what ‘Sonus’ means!
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 The acronym Sony has been derived from Sonus, the Greek goddess of sound. It just seems that this Fortune 500 company might just require all the godly help in the coming quarters given the latest financial projections that Sony has churned up! The company is all set to post an operating loss of $2.9 billion. In the current era where there’re innumerable companies posting losses year after year, does this come as a surprise? Umm, yes, if you look at this from the perspective that this is Sony’s first reported yearly operating loss in a huge 14 years. Add to that the gift of a lack lustre business environment and various other factors like intensification of price competition, restructuring charges and deterioration in equity in net income of affiliated companies, and you have the acerbic daughter of miseries ready to take you out on a date. But really, this story is not about Sony globally, but about Sony India, and how their date is lined up with the miseries of economies.
The scenario for Sony in India, one has to accept, is quite contrary to global conditions. Firstly, because the slowdown in India – though seemingly persistent – is finally simply a slowdown and not a recession. And secondly, if you thought that summer is the time for only cola majors to introduce cheeky, new ‘models’ and drinks, then you have no idea what Sony India is up to. Sample this and pop your eyes out. While Sony India saw a thundering growth rate between 20-25% (averaged across various product segments) in the year 2008-09, despite the slowdown their forecasts predict that growth rate will more or less continue to range between the super levels of 15-20% for this coming season. But Masaru Tamagawa, Managing Director of Sony India, is devastatingly honest, “Sony is analysing trends category-wise rather than simply looking at the overall growth. Thus, in FY09, the categories that will continue to grow or shrink will become more obvious.”
But isn’t this akin to painting a glorious Neroistic picture when Rome all around seems to be burning? For starters, what about segments like the consumer audio visual segment, which overall seems to have taken the biggest hit across the industry? Tamagawa reticently accepts and shares detail with us, “Yes, market growth in the segment, which had been approximately 10% in the past few years, might slowdown further.”
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 To their credit, and to some good analytic work by their team, Sony had smelled the bad air – if you can call a slowdown that – sometime in advance. Interestingly, a couple of months back, we had tracked the same marketing honchos at Sony who were claiming at that time that they were quite optimistic of achieving at least a 35% growth from the festive season, compared to sales in the last festive season. To that effect, as a part of their special festival offer, Sony India unveiled its ‘Bond with Sony’ marketing plan as a prelude to the power-packed globally released James Bond thriller, Quantum of Solace. Lucky Draw coupons for all customers buying select Sony products formed a critical promotional tactic within this campaign too.
But critically, in spite of years of existence within India, Sony still has a relatively small market share of around 10-15% in the consumer electronics segment as compared to its competitors, who have grabbed the bigger chunk of the pie. While LG Electronics India Pvt Ltd. has a market share of 25% and Videocon Ltd. has 22%, even Samsung India Electronics Pvt Ltd. shoots the Sony trail with a larger 17% market share!
But hold on. All is not lost. If Sony is the damsel in distress, the laptop could very well turn out to be its Red Riding Hood. Going by the numbers and product category, the total laptop market size in India is currently pegged at 1.5 million units. This is further expected to grow at a rate of over 30% on a y-o-y basis. And to top it all, in this segment, Sony has registered over 100% growth every year since the past few years. Ramesh Srinivas, Head of Consumer Markets, KPMG India shares, “Sony has clearly identified higher income customer groups for its laptop category. And in the same league, it has come up with a pocket PC, which is lighter and better designed.” Similarly, in the previously mentioned consumer audio visual segment, Sony – despite a relatively low growth rate – has a huge 18% of the Rs.125 billion segment. Add to that their stupendous performance in the cybershot camera series, where the company is eyeing a 20% growth this fiscal (and plans to increase its market share from the current 42% to 47%). Tamagawa adds, “We have established three pillars of strategy – focus on key strategic growth categories, enhancement of the sales channel network, and lastly, local staff development.”
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