First Time AC Buyers Are Not Our Target Audience: Mitsubishi Electric

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  • The company said that it will take all possible steps to fulfill Prime Minister Modi’s Make in India vision
  • Mitsubishi Electric said that it is very critical about dealer margins in India

Yozo Ito (YI), business unit head and director, Living Environment Division, Mitsubishi Electric India Pvt. Ltd. and Neeraj Gupta (NG), senior general manager, Living Environment Division, Mitsubishi Electric India Pvt. Ltd.in an exclusive conversation with EFY Group shared the reasons why Mitsubishi Electric is not aggressive in the online sales channel. He is of view that AC sales in the country majorly come from offline channels.

Ito, mentioning, Prime Minister Narendra Modi’s vision of Make in India, said, “We are exploring the possibility to start manufacturing air conditioners in the country. Mitsubishi Electric currently imports ACs from Thailand and Japan.”

Here are some more excerpts from the conversation

ACE – Mitsubishi Electric is one of the most experienced AC brands in India but there has not been expansion in terms of sales channels yet. Any reasons?

YI – Being a Japan-based consumer electronics brand, Mitsubishi Electric does not believe in aggressive approach. We have a very strong offline network in India.

In fact, like most of the young brands, we do not believe in advertising and marketing our products beyond a level. Our network of sales and service dealers covers almost the entire country.

We believe in providing complete Airconditioning solution to end customer which includes quality installation & service besides good product as our focus has and always will be more on word of mouth sales as every satisfied customer act as a brand ambassador for us.

Yozo Ito (YI), Business Unit Head and Director, Living Environment Division, Mitsubishi Electric India Pvt. Ltd.

ACE – Mitsubishi Electric has opened around 10 experience centers in the last six months, is this a sign that Mitsubishi is now keen on expanding in the country?

NG – We have always counted ourselves as a premium AC brand in India. The penetration of ACs in India is five to six per cent. Accordingly, we target the affluent AC buyers. As a matter of fact, first time AC buyers are generally not our target audience.

Most of the consumers who invest in Mitsubishi Electric ACs, are the ones who have already experienced air conditioners from at least one other brand & are looking for improved product & service experience.

In a nutshell, Mitsubishi Electric ACs are an upgrade brand for most of the consumers. We are proud that a majority of our consumers do not switch to any other brand once they get Mitsubishi Electric ACs installed.

ACE – How friendly is Mitsubishi Electric to its sales network? Can you share the number of counters you are present at?

Neeraj Gupta (NG), senior general manager, Living Environment Division, Mitsubishi Electric India Pvt. Ltd.

NG – Mitsubishi Electric is very critical about dealer margins. We can guarantee that our dealer margins are among the best in the industry. Customer retention through recommending most suitable products, quality installation and good after sales service is what we tell our dealers to focus on.

Our channel of operations is based on sales and service network model. Most of the dealers we have in our sales network are also our service dealers. This helps us give our consumers the best AC experience.

Mitsubishi Electric has more than 1000 sales and service dealers in India. We as part of our company philosophy allow dealers to maximize their profits & expand only when our existing dealers find it difficult to service the geography they have been assigned. We also have over 3000 retail outlets in upcountry towns to target Tier-II,Tier-III cities, these are our extended arms & attached through distributor and Service franchise

ACE – What about presence in the online sales channel?

YI – The sales and service model that we follow is also the reason we are not present in the online sales channel. We want every consumer buying a Mitsubishi Electric AC to experience everything starting from installation to after sales service from the hands of a Mitsubishi certified professional.

Moreover, we at Mitsubishi Electric are not sure whether the online sales channel will be able to provide that experience or not. We do not want to take a risk with our brand image and hence prefer our existing model which does not coincide with online channel sales philosophy. However, we are open to online channel and are trying to find out how best can we fit in our existing model with online sales channels.

ACE – How was the last financial year for you? Have you noticed any changes after entering the market in India directly?

YI – The last few years have been stagnant for the whole AC industry in the country. AC penetration rate has not increased as much as we were expecting, but it has not gone down too.

Last financial, we were close to touching revenue for Rs 1,000 crores from the AC segment. Most of this revenue came from residential AC segment. It contributed almost 65 per cent of total Mitsubishi Electric AC sales in the country.

We were operating in India through Pan India distributors for a long time before deciding to enter the market on our own. From the day, we entered India on our own, we have been growing exponentially. The growth in the initial years was around 75 per cent. Now it is around 25 per cent for Mitsubishi Electric ACs. Last eight years, have been great for us as an AC brand.

ACE – What are your expectations this year? Where are you focusing on Residential or Commercial ACs?

NG – Mitsubishi Electric is expecting a double-digit growth this year. We have been doing good business since the start and are positive that we will maintain the 25 per cent growth rate this year as well.

Our focus is on both the verticals – residential as well as commercial. Our consumers from the residential vertical suggest Mitsubishi Electric ACs to the consumers in the commercial vertical and vice-versa. The beauty of our sales and service model lies in the fact that almost all our dealers serve residential as well as commercial consumers.

ACE – Where are the ACs sold in India manufactured?

YI – All the Mitsubishi Electric AC units sold in India are either imported from Thailand or Japan.  Prime Minister Narendra Modi has requested consumer electronics brand to make more in India and we want to respect his vision. We are exploring the possibility to start manufacturing in India.

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