RIL’s big plan!
Under the leadership of Mukesh Ambani, Reliance is preparing to play a big move in the electronics market, that too in the same way as they had attacked the beverage market through Campa Cola. Now the same formula is being tried in electronics (TV, refrigerator, washing machine, small home appliances).
New brand and strategy
An ET report said that Reliance has created its own electronics brand, the major names of which are Kelvinator and BPL. Earlier these were being used under license. For example, Reliance had previously held the license for the Kelvinator brand and acquired it for about ₹160 crore last quarter. Similarly, he had also taken license for BPL brand. The product line under these brands is now being expanded from old-fashioned small appliances to premium categories.
Aggressive pricing and trade margins
Reliance’s strategy is based on three main pillars, which are as follows:
- Low prices: Reliance aims to have products branded like Kelvinator or BPL priced 20-25% lower than competing brands like LG or Samsung.
- High Margins: According to industry experts, the margins of these new products will be around 8-15% higher than established brands.
- Wide Distribution Network: Not just limited to its own stores, Reliance will also launch its brands across multi-brand electronics stores, regional retail chains and e-commerce platforms.
Expanding from domestic to global, Reliance has started exporting Kelvinator and BPL-branded products to South Asian countries like Nepal and Bhutan. After this, Sri Lanka, Middle East and later Africa has been targeted. The company believes this is an important step in their effort to democratize access to technology.
Product category expansion
Reliance has launched a complete range of home appliances under the Kelvinator brand. Side-by-Side Premium Refrigerators, Front-Load Washing Machines, Direct Cool Refrigerators, Air Coolers etc., while the BPL brand is being expanded from TVs in the medium and premium categories to ACs, Refrigerators, Washing Machines and small appliances like fan-coolers. That means presence is being ensured in every price point and category.
Why might this strategy work?
This strategy is interesting because the market is dominated by big brands, but the prices of their products are high. Reliance has a powerful distribution network and retail platform (Reliance Retail), which can rapidly scale up brand presentation and sales. By entering the global market, the company can quickly cover new markets, where competition may be less.