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The tectonic shift in power equations did not end with the auto sector. Even in consumer durables the First World has lost out on its stronghold
From 1945 till the early 1970s, American and European consumer durable players were dominating the sector globally. GE, Westinghouse, Maytag, Whirlpool, Electrolux, Thomson, Philips, Grundeig, to name a few were at the forefront of the durable sphere of the world. However, during the mid-60s Japanese players like Sony, Toshiba, Hitachi and National arrived on to the scene. But these players were treated in a derogatory manner by the western consumer durable giants. They were considered to be poor quality imitations by the western consumers. Only the less affluent could afford their products; the premium class looked down upon them. And at this juncture, players like LG & Samsung were never even heard off.
But gradually by the late 1960s a kind of shift started taking place. Japanese players started improving the quality of their products. They came up with well though-out strategic & marketing plans. Suddenly, by the early 1970s, one could see consumers’ outlook towards these companies changing. A tectonic shift in the power equation happened with the launch of the Sony Walkman, which is heralded as the harbinger of Japanese supremacy in the durable space. After Walkman, innovation was no longer the domain of just the western world. The Japanese had arrived with a bang. Sony’s rise is heralded as the rise of not only Japan but had also of Asia in this sector.
According to Jagdeep Kapoor, CMD, Samsika Marketing, “There were mainly three reasons for the shift in consumer preference from American & European goods to the Japanese – affordability, quality and the sense of novelty. And 1973 was a period when consumers wanted innovation and quality and were not bothered where the brand was coming from. US marketers failed to create adaptability between the brand and the consumer. The Japanese took advantage of this and therefore succeeded.
Till the 1990s, Japanese players completely dominated the durable space and the American & European players were nowhere in the picture. However, by early 1990s, the Japanese economy went into a tailspin, another shift occurred and this time it was the Korean chaebols LG & Samsung that took the electronics world with surprise. In just a matter of few years, they overthrew Sony and became the top two globally. The 1990s and the first decade of 2000 have been completely dominated by LG & Samsung. But by 2010, another shift will happen that has already started to make waves.
Indian & Chinese consumer durable companies are now inching their way upwards to book their seats in the top echelons of consumer durable space. Chinese players Haier (with its acquisition of Maytag) & Lenovo (with its take over of IBM’s Personal Computing Division) are creating ripples globally. Currently, Haier is the no. 2 player in the US.
Indian companies are not too far behind. Videocon has already taken over Thomson’s picture tube unit and the marketing rights of the iconic Electrolux brand in India. Despite its failed attempt to acquire Daewoo Electronics Corp. of Korea, it has not given up on its acquisition spree. The company is now making waves after announcing its intentions to buy Motorola’s handset unit. Even players like Godrej Electronics, Mirc Electronics (owners of Onida) and BPL are making strong comebacks. Undoubtedly, the next few years will see the rise of Indian & Chinese players in this space. The tables have decisively turned!
By vareen ray
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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