Baron - Rewriting Indian Consumer Electronic Goods Marketing

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Case Details:

Case Code : MKTG007
Case Length : 7 Pages
Period : 1994 -2002
Pub Date : 2001
Teaching Note : Available
Organization : Baron International, Videocon, Philips
Industry : Consumer Electronics
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"I will not rest until I drag Joe (J.R.Mulchandani, Chairman, Baron International) to the streets."

- Venugopal Dhoot, Chairman, Videocon Group in the mid-1990s.

Shaking The Market

The Baron group entered the Indian consumer durables market in December 1994, and the markets were never the same again. Over the next few years, at the corporate offices of competitors like Videocon, Philips and Mirc Electronics, it was the same story - they were all making frenzied attempts to hold on to declining market shares. Baron's initial product offering, an Akai color television (CTV), was priced at Rs 13,000 - while the market price was Rs 16,500. This was clubbed with an exchange1 offer on old music systems and TVs and free-gift schemes whereby 14-inch CTVs, mobile-phones, refrigerators and Bajaj Sunny mopeds were offered free on the purchase of a 21-inch CTV.

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These moves, combined with Baron's full-page advertisements that appeared regularly in the national media, lured buyers all over the country. The move changed the CTV market share pattern very soon, with Akai's sales increasing from 2500 CTVs in 1993-94 to 4.29 lakh CTVs in 1997-98.

In December 1998, Baron repeated the success story with the Aiwa brand in the hi-fi audio systems segment. Within 5 months of the launch, Aiwa replaced Philips as the segment leader, garnering a 45% market share, as compared to Philips' 17.2% share.

The launch of the TCL range of consumer electronics in 1999 also took the market by storm as the China based TCL was known for its dirt-cheap products. With almost every new scheme and every new tie-up, Baron unleashed a new war in the Indian consumer electronics market. A majority of the players began indulging in 'one-upmanship' on the pricing and promotion fronts...

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1] The old televisions/music systems collected through the exchange schemes were either sold in the secondhand market or the rural markets.


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