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Meenakshi Radhakrishnan-Swami |
May 11, 2005
It's bad news if you're the world's best-selling digital camera brand, but in India you're best known for your photocopiers, computer printers and cartridges.
If Canon is associated with cameras at all in India, it's with the old-fashioned sort that use film.
Yet worldwide, Canon holds the top slot for digital still and high-end SLR cameras, and second place in digital video camcorders. And, not surprisingly, it wants to become a significant player in the Indian consumer market too.
By 2007, Canon India aims to be market leader in both digital video and digital still cameras, ahead of Sony and Kodak. It will be a tough battle.
The market for digital cameras in India is fewer than 275,000 units -- that's less than three cameras for every 10,000 Indians. If the volumes are disappointing, the market in value terms isn't impressive either: industry sources assess the market to be worth just over Rs 100 crore (Rs 1 billion), though it is growing at more than 80 per cent a year.
Those numbers don't bother Canon overmuch. The cameras business is expected to contribute 12 per cent of the company's projected Rs 330 crore (Rs 3.30 billion) revenue in 2005, up from 4 per cent of Rs 264 crore (Rs 2.64 billion) last year.
By 2007, cameras will account for 25 per cent of anticipated revenues of Rs 650 crore (Rs 6.50 billion). "Cameras are now our main thrust. We're an ambitious company," accepts Alok Bharadwaj, vice president, Canon India.
How does that ambition translate into strategy? Three changes mark Canon's new approach. It's reaching out to a completely new target group, aggressively expanding its retail presence and rejigging its sales organisation to keep up with the external changes. Take a look:
The big picture
When Canon opened shop in India in 1997, its focus was purely on selling fax machines and copiers. The entire business was run through direct sales agents -- until 2001, the company operated with 150 agents in 14 branches.
In 2001, though, Canon decided to leverage its technological strengths in the Indian market as well -- it launched its printers and scanners that year, followed by projectors and laser printers the next year. That meant creating a channel engine. Beginning with 57 towns, distributors were appointed who became exclusive dealers for Canon products.
Slowly, the urban bias also disappeared. Once Canon accepted that consumption patterns and economic power in India are dispersed -- they begin at the metros, but penetrate deep into small towns and villages -- it began studying ways of tapping that market.
Two years ago, it conducted an internal study into the number of towns in the country where you can buy computers. The answer was a surprisingly large number: 330.
The implication for Canon was obvious: if you can sell computers in these towns, you should be able to sell printers and their consumables (cartridges) as well.
A new rung of sub-dealers -- Canon Empowered Partners -- was created under the distributors to cater to these towns. At present, Canon has a dealer in all 330 towns -- but company research indicates that the number of computer-buying towns has increased to 550.
"We'll now have to set up a dealer in every district centre in the country," says Bharadwaj.
"It's a colossal job." By next year, Canon is aiming for half its revenue from sales in B and C category towns -- at present, the top eight cities account for two-thirds.
Focusing on retail
The shift in focus from the office to home, though, was still missing. That didn't take shape until last year, by when Canon had launched its digital cameras and digital video camcorders as well.
Given the PC-centric product portfolio, the typical customer was necessarily computer-literate. Between 18 and 40 years old, he was also from an urban, higher income background.
That's changed, and how. Last month, Canon launched 28 new products -- including DV camcorders, digital cameras, printers, scanners and home cinema projectors.
Not one of these was described as an "IT" product. Rather they were "digital imaging entertainment" products, all of which connect to television sets, as well as computers.
Keeping the PC out of the picture has opened up a whole new customer group for the company. Canon's target customer is now anybody who owns a television set -- that's a 12 million unit-strong base, far larger than the personal computer-owning group. (Strictly speaking, the PC market is also about 10 million units, but only a very small percentage of it is geared towards home use.) "We needed to speak the consumers' language," says Bharadwaj, explaining the new focus.
"The TV is the epicentre of home entertainment in India. By enabling connectivity of digital imaging products with each other and with the TV, we are consumerising technology."
Of course, selling to consumers is different from selling to corporate clients. "We were a blue-shirt-and-tie sort of company earlier. Very formal. Now we're bringing in glamour into our products and product launches," points out Bharadwaj.
Last year, when Canon introduced a mammoth line-up of 51 digital imaging products, filmstar Amrita Arora played brand ambassador. At last month's 28-product debut, model Yana Gupta did the honours.
That's not nearly enough -- a focus on retail is critical. This is virgin territory for Canon: its solutions business is handled entirely through agents while dealers now promote low-end copiers, as well as scanners, printers and fax machines. But last year, the company ventured into franchise agreements for retail in three business areas -- IT, photo and audio-visual.
The IT retail model is called Canon Retail Station. Set up in association with IT product dealers, the Canon Retail Stations sell printers, scanners and all-in-ones (a combination of printer, scanner and copier).
At present, there are 18 such outlets across India; by end-2005, Canon will take the number up to 30. Similarly, Canon Digiclick Zones are photo retail outlets that promote the digital cameras, while Home Cinema Centres promote a new concept in the Indian market -- home theatre systems based on projectors, rather than televisions.
At present, there are nine Digiclick Zones and seven Home Cinema Centres across India; by year end, there will be 50 and 18, respectively.
Naturally, brand building forms a significant part of the new strategy. Canon's budgeted Rs 20 crore (Rs 200 million) this year, which will be spread over three new TV commercials (it switched from Rediffusion to Dentsu last year), exhibitions, road shows and in-store displays. "We're new to all this. We're still learning all the terms," laughs Bharadwaj.
Jokes apart, Canon faces a steep learning curve. It's paying close attention to how consumer electronics brands market their products, hoping to learn a few tricks of the trade. That may not be such a good idea, cautions Harminder Sahni, principal at retail consultancy KSA Technopak.
"Canon should find newer ways to reach customers. Learning from Apple, rather than LG and Onida, may be a better idea because there is huge difference between home appliances and gizmos," he says.
For their part, consumer electronics firm, too, question Canon's declaration of rivalry with them. "From a business viewpoint, the audio visual market is completely different from cameras and printers. Canon will have a tough time changing market and trade perceptions about it," points out the marketing head of a consumer electronics firm.
Adds Ravinder Zutshi, deputy managing director, Samsung India Electronics, "Taking on the likes of Sony and Samsung is tough. I can only wish them good luck."
Canon recognises that such several challenges remain to be faced. "We're not a consumer-driven company, yet," admits Bharadwaj, adding "We need to change the organisation's culture."
That requires hiring managers with competency in consumer marketing, improving reaction time to changes within the market and reinforcing its service network. At present, Canon has service centres only in the top eight cities.