Raj Jain, Managing Director, Whirlpool of India: Will another brand give him volumes?

The financials alone cannot explain the upbeat 'got-it' tone that marks most senior managers of the Rs 1,116-crore Whirlpool of India (WOI). After posting its maiden profit in the country in 2000, the company's net profit did decline nearly 54 per cent to Rs 9 crore in 2001, even though sales rose 5 per cent.

But then, the Indian arm of the US-based white-goods major has been a confusing picture ever since its tumultuous entry in the mid-1990s. Remember? It pipped its transatlantic rival Electrolux to snap up Kelvinator of India (KOI), and found itself selling Kelvinator fridges in India, briefly, even as it struck a separate joint venture for washing machines with TVS. Then it tried transferring Kelvinator's 'compressor' reputation to Whirlpool, before returning the 'coolest one' to its global owner, Electrolux. That done, it was time to exert centripetal forces to bring all its operations together-in a single company, to market all products under a common global brand.

Since then, Whirlpool has taken just a few years to blast into the Indian mind, and that too, under pressure. ''Our performance needs to be looked at more in the context of key competitors bleeding bottomline or marketshare, even both,'' says Raj Jain, Managing Director, WOI. He may well be right. Take Electrolux, which managed to keep up its sales momentum, but by losing a huge Rs 144 crore on sales of Rs 463 crore. Or BPL, which maintained 10 per cent net profit, but suffered such marketshare erosion that it reportedly plans to exit fridges and washing machines altogether.

Market conditions are tough. Traditional direct cool refrigerators saw volumes decline by nearly a tenth in 2001. But Whirlpool upped its overall refrigerator share by two points to 26.4 per cent-edging past Godrej GE for market leadership.

The washing machines market also lost volumes-some 9 per cent. But Whirlpool held steady at No 2, with a marketshare of 17 per cent (a dip since 1999 though). Videocon, at 32 per cent, is still the leader by far, but Whirlpool won't let it rest. That's for sure.

In a market of undercurrents, eddies, and counter-eddies, Whirlpool has sure got something figured out.

Centripetal Brand

When Whirlpool launched its 'Flexigerator', with foldable shelves, in 1997, observers were more impressed by the thoughtfulness than the sales. A year later, when Whirlpool started addressing the upper-crust Indian 'homemaker' with its 'ice' selling proposition for its Quick Chill refrigerators, observers weren't sure if the brand had done its homework for India. As it turned out, it had. The market had long moved on from compressor and insulation talk, and the Indian consumer needed her beyond-the-box aspirations addressed. Today, 'ice magic' is charming people in markets as diverse as soap and shirts.

It's no surprise that Whirlpool defines its strategic edge as consumer insight, with nearly half per cent of sales going into consumer research. ''Our research is so rigorous that sometimes we have a better sense of how a competitor brand is positioned than its own marketer,'' boasts Ashok Bhasin, Vice President (Marketing), WOI.

Ashok Bhasin, VP (Marketing), WOI "Opera will go to lower strata towns, but the brand differentiator is the consumer need-mindset"

Well, that may sound overstated, but the firm does have a good grasp of the domestic competitive scenario. Take differentiation of products. In washing machines, for example, it zeroed in on the Indian housewife's faith in the efficacy (rigour and fibre-sensitivity) of her own hand-wash-and designed its Agitator machine to mimic the same washing action. The overall theme: magical empowerment.

Similar thinking could now help Whirlpool sell several other home products, from air-conditioners (ACs) to microwave ovens. The only trouble is that the brand's appeal remains upmarket. By WOI's reckoning, of India's 49-million potential households, just 4 million are run by 'discerning modernists', in psychographic terms, while 17 million aspirants and 28 million traditionalists make up the market's bulk. Bridging the modernist-aspirant gap could take ages, while WOI needs quick volumes.

''It is not tenable in the long run for a single brand,'' feels Jain, ''to straddle the entire spectrum of consumers.''

That's why the company has started experimenting in Andhra Pradesh and Maharashtra with Opera, a local brand that differs from Whirlpool not so much by way of price (though it's marginally cheaper) as appeal segment. Elaborates Bhasin, ''Opera will go to lower strata towns, but the real brand differentiator is the consumer need-mindset.'' So while the first-time buyer of a 170-litre direct-cool Whirlpool fridge would value quick ice-making and electronic features, the typical Opera consumer will be more interested in chilled water, sturdiness and seven-year warranty. And wherever Opera is introduced, the firm will re-map its 5,500-dealer strong distribution network to optimise the brand and retail catchment matrix.

Interestingly, WOI's dual-brand strategy comes at a time when Electrolux is merging its mass-market Kelvinator and topline Electrolux brands into a single entity (the idea is to sell on universal appeal).

Can't Whirlpool do the same? Well, perhaps. But more-than-organic growth is the imperative. WOI needs no further production or distribution infrastructure. It already has three factories in Faridabad, Pondicherry, and Pune (combined installed capacity of 4.5-million appliance units). It needs a crowd-puller. Yet, WOI's dual-brand proposal is still under debate. Brand-building is expensive and risky, after all. Any brand buy-out options? Possibly. ''There has to be some amount of shake-out and consolidation in the home appliances market,'' says Jain.

Being profitable helps. Also, since 1999, WOI has lowered its debt: equity leverage ratio from a high of 4 to just 2. The company is busy replacing the Rs 150-crore plus high-cost debt it had taken on in 1997-98 with low-cost domestic non-convertible debentures, and may even borrow funds from overseas, with or without the support of its US-based parent, which has invested $150 million in its 82-per cent subsidiary so far.

Brand Consistency

While the dual-brand debate continues, what's clear is that Whirlpool will not be allowed to spin away from its core set of values. According to Benoy Roychowdhury, Vice President (Sales), ''It's more important to be consistent than correct.''

Benoy Roychowdhury, Vice President (Sales), WOI "It's more important to be consistent than correct. It's a cut-throat, hyper-competitive market"

All of Whirlpool's recent launches, be it the White Magic Hot Wash machines (first hot wash in the semi-automatic segment) or the just-unveiled MagiCool air-conditioners, remain loyal to the brand's central mission-of responding to the homemaker's need, under pressure, for magical powers to feather her family nest.

''We have build the brand such that today a housewife has an appetite for Whirlpool. All it needs is product form,'' says Bhasin, claiming that the brand has made a dramatic splash in the market for ACs.

And yet, WOI is aware that key competitors are onto its game already. ''It's a cut-throat, hyper-competitive market,'' admits Roychowdhury. Samsung and LG, in particular, are likely to offer stiff resistance. With market growth ranging from negligible to negative, it's a bare-boned battle for marketshare-with one's gain the other's loss. ''This year we'll double our volumes in washers,'' says Ravinder Zutshi, Vice President (Sales), Samsung India, which has just commissioned its first washing machine production line in the country. Even Electrolux is playing catch-up aggressively, with a slew of washing machines launches aimed at closing what Anand Bhardwaj, Executive Vice President (Marketing & Marketing Services), Electrolux Kelvinator, calls, ''Whirlpool's three-year headstart in washers.''

As WOI moves to consolidate itself and leverage its brand in other markets (including cooking ranges, linen dryers and dish-washers), it will need to shield the equation it has struck with its modernist homemaker from rival attack. ''The issue now is to do more of all that which brought us to leadership,'' says Jain. By that, he refers to cost-control and bottomline management as much as launching meaningful products and keeping the brand relevant to the consumer. The brand interface is paramount. ''We ultimately want to get out of all component manufacturing,'' says Jain. In 2001, the company sold its plastic manufacturing business to Brite. Target for 2002: evaporators. ''Investments will no longer be in manufacturing capacity, but developing new product solutions for the consumer,'' says K.V. Chandrasekaran, Vice President & Chief Financial Officer, WOI, making it clear that the company views itself, primarily, as a fulfiller of human needs. Not a metal-basher.

The consumer services division, which provides post-purchase service through 550 service providers in 140 cities (and contributed Rs 6 crore to WOI's gross profits for 2001), has become important to the process of customer relationship management. The idea is to deliver on the actual promise-of homemaking partnership that lasts long after the actual purchase. The service doesn't yet match developed-market standards, but WOI hopes to be wowing customers soon with customised solutions (washing machines in high-rises, for example, need special plumbing to handle the water pressure). The objective: life-long loyalty. It's already starting to pay back. As B.K. Srivastava, Vice President (Consumer Services), discloses, most of its microwave ovens are being bought by the existing Whirlpool customer base.

That still doesn't resolve WOI's dilemma on targeting the traditionalist consumer. Perhaps the same brand can do the job. Perhaps it's just a matter of altering the brand's outward get-up for the traditionalist-turned-aspirant, while retaining the original essence of the same customer bond.