Samsung steals the show
By Akanksha Prasad
The LCD-TFT display market is on a roll, and is expected to overtake CRT display units in the next year. Display vendors believe the LCD display market will grow by 113 percent this year to reach 35 percent of overall monitor sales. This year LCD sales have surpassed CRT’s in value terms. Next year it is expected to overtake it in unit terms as well.
According to industry estimates, in unit terms, LCDs are expected to sell around 1.7 million units in 2007 against 3.3 million CRTs.
The high growth of LCDs this year has been in spite of the 15-17 percent rise in the global prices of panels since April 2007. Worldwide prices of panels have increased by approximately $22-25 per unit, translating into a Rs 1,200-1,500 increase in product prices after accounting for import duties and local levies.
Although the price gap between CRT and LCD is still 70 percent after price hikes, corporates are buying the flat panel display due to its space and power savings features.
Upgrade demand has been strong, and many channel respondents said that it was as much as 40 percent of their total sales.
Consumer and SOHO demand is also picking up. In the home, gamers are the largest category of users. The past one year has seen 17-inch LCDs take over as the mainstream size from 15-inch, and vendors expect 19-inch to become the mainstream model by next year. In terms of screen size break-up, 15-inch will be only 20 percent of the shipments, 17-inch is expected to contribute 60 percent, and 19-inch will be 20 percent. Currently, the price gap between 15- and 17-inch is Rs 1,600, and 17- and 19-inch Rs 2,000. Vendors expect that by 2010 LCD monitors will be a six million market.
Channel relationship
On this parameter, LG came on top, followed by Samsung and then Viewsonic. We polled people to rate competing brands on various aspects including quality of channel managers, fairness and transparency of vendor policies, and management of channel issues.
While Samsung is the most aggressive in terms of marketing and sales, it lacks in managing channel expectations. Many respondents complain about long-pending warranty issues despite escalating the matter to higher-ups. Regular delays in payment of incentives and back-end rebates are also an issue.
Compared to this, LG is perceived to be more channel responsive. Escalation management is smoother and channel managers more accessible.
But respondents said that Samsung has been making amends and has put a strong escalation mechanism in place where resellers can write about their problems directly to the top management on a special e-mail; this is helping restore channel confidence.
Product availability
On the product availability front, Samsung was ranked higher than LG and Viewsonic, in the same order. Samsung was rated above LG because over the last few months respondents (mainly in the west and south) reported a substantial increase in parallel imports of LG LCDs leading to loss of business for the organized channels. In the case of Samsung, a few tier-3 cities polled showed availability was irregular. Other complaints from several respondents was the discontinuation of 15-inch flat panel displays by all vendors, despite customer demand. Availability of Viewsonic suffers in the north and east, while in the south and west the company has an efficient distribution network and is widely available.
Marketing and branding
The two Korean companies undoubtedly lead in brand awareness and customer pull due to their presence in several consumer product categories. However, Samsung is the more aggressive of the two in terms of marketing, with more tactical promotions and aggressive media advertising. Viewsonic still suffers from lack of visibility and is perceived as a second-rung brand despite its global standing.
Service and support
Channel respondents say that there are not many service and support issues related to LCDs. DOA issues are minimum, while the rate of in-warranty failures or repairs are also negligible. In most cities where vendors have authorized service providers, they have started providing onsite warranty which has reduced the problems for channels. All vendors provide a standard 3-year warranty on their products.
LG however has faster onsite warranty mechanisms as compared to Samsung, mainly in tier-3 cities. In tier-1 and tier-2 cities, both companies take 3-4 days to replace a faulty product, but in smaller cities Samsung takes an average of two weeks, while LG takes under 10 days.
Viewsonic received a very low score as respondents say its after-sales support is slow and unfriendly. It also has fewer service centers and replacements take around three weeks in tier-2 cities.
Price-performance
Samsung came out the winner in price-performance as its technology is perceived to be better than that of its arch-rival LG in terms of product design and display resolution. Over the last few months LG has decided to take a premium price positioning across all product categories and hence priced its products higher than Samsung. Although the price-differential isn’t significant, respondents said it’s hurting sales because with the two brands neck-to-neck in brand perception there is no scope for a price premium. Viewsonic on the other hand is priced Rs 1,000 lower than Samsung.
Conclusion
In the final ranking, Samsung stood ahead of LG primarily because it did better than LG on three parameters—marketing and branding; product availability, and price-performance. However, the company still needs to work on its channel relationship management and spruce up its act on resolution of warranty issues and incentive payments, which is letting it down. LG continues to be a consistent brand; however it needs to review its pricing strategy. Viewsonic also needs to review its pricing strategy as its current USP of low-pricing is creating the perception of being a second-rung brand. Secondly, it needs to significantly improve its distribution presence in the north and east.
Intro
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