Finance Companies Boost Sales

Reliability of machines and consistency in service determines the success or failure of home PC vendors. The home PC segment requires support and training in a large measure and hence vendors have to work closely with their channel partners as well as their customers. With the home PC market growing by 60 percent annually, both, vendors and their partners can ignore this market at their own peril.

The growth has also triggered the emergence of many finance companies who have joined forces with channels to make PC buying an easy affair. This has made computers increasingly affordable for the middle class.

Another factor influencing the PC popularity is the Internet. The man of the street wants easy access to the Net and what better way to get connected than to buy a home PC. This is reflected in an IDC report, which mentions that around 79 percent of buyers in the home segment look forward to Internet connectivity.

Budget planning in the home segment has seen a change in the past few years. After setting aside the necessary amount for a TV or a fridge, the next item on the purchase list is a computer. With 30.3 per cent of the PCs going to the home/SOHO segment, volume sales have led to local assembling of the systems by most major vendors thus lowering PC prices. Channels too did their bit by ensuring that service and support was provided to the customers, which ensured a regular demand.

As PCs evolve more and more as a consumer product, vendors, assemblers and channel partners are trying to grab consumer mindshare. Despite the presence of many MNCs in the country, local assemblers enjoy an advantageous market share of over 50 percent. The popularity of assembled PCs is driven by their low prices, multiple choice of configuration, personalized service and attention.

"Assemblers deal with a limited number of customers who know them personally. Even upgrading components becomes easier as the assembler recognizes my needs and provides solution which is in sync with the nature of work on the PC," says Anurodh Patel, a proud owner of an assembled PC.

The selling patterns for the home segment and the corporate segment are completely different. Corporates are more concerned with the brand and the accessibility of the seller for quick after-sales service. While service is equally important to the home segment, users also look for value-adds that will make their purchases worthwhile. This could be in the nature of a free product. Looking at the growing popularity of the Net and its important role in buying patterns of the home user, vendors, assemblers and even channel partners played on this element to increase sales. This led to bundling of Internet connections, peripherals, software, shareware etc with the PCs.

HP discovered that customers were on the lookout for aggressively priced PCs and reviewed their price tags accordingly. IBM, on the other hand, oscillated and still wavers between affordable prices and reliable performance. Wipro and Compaq too worked towards providing channels with better margins, support, training, joint promotional schemes, dealers meeting and joint campaigns for their channel partners, which added to building their brand image in the channel network and end user segment.

While attractive deals were chalked out for the users, vendors realized that this was not enough to push the products. What was required was to keep the channel satisfied too. And what channels were looking for were reliability, consistency and good margins.

So vendors worked on special deals for channels, apart from working on competitive prices. These schemes ranged from special offers for festivals like Dusshera and Diwali to long term schemes, which would motivate channels to sell more of the branded products.

Channel partners usually operate on a margin of approximately 10 — 12 percent in the home segment. However, following the decision by big brands to introduce special packages for the channel, partners have availed sops like gold coins, free trips to exotic locations and higher incentives, triggering higher sales in branded PCs.

Expectations of home segments are changing at a very fast pace. As new technologies are heralded in the country, vendors and assemblers scramble to present the same to end-users at affordable prices. Despite these efforts, brands like HCL and Zenith saw a decline in the PC market, and IBM had a marginal growth compared to PC sales of the previous quarter.

Wipro and Compaq were amongst the few who managed to show positive results after consistent efforts. Being the major players in the PC market, by the end of JAS quarter they were moving towards creating a larger market share in the home PC segment. The duo managed to reach this position in Bangalore by using effective channel strategies and policies. They have also worked on improving service support, features and quality of the products.