Embedding IoT in Home Appliances is Our Latest Strategy: Bosch and Siemens

The company, apart from focusing on internet of things and smart features, has also deployed ‘Hardware Plus’ strategy in India

BSH, with its brands Bosch, Siemens and Gaggenau will be bringing in a lot of connected products to India in the next two to three years, said Gunjan Srivastava (GS), MD and CEO, BSH India, while sharing the company’s plans for the country in an exclusive interaction with EFY-ACE.

He also noted that internet of things (IoT) is going to be a major technological advancement in all the segments of consumer electronics industry. However, instead of developing a handful of products, BSH is focusing on developing products that can help convert a home into a smart ecosystem.

Here are some more interesting excerpts from the exclusive interaction:

Que – How are Bosch and Siemens home appliances different from other brands?

GS – Like every brand, Bosch, Siemens and Gaggenau have their own character and persona. They stand for something which is unique to a consumer not only in India but also elsewhere in the world.

First and foremost, if I have to look at it from an Indian perspective, both of them have a strong German heritage of more than 100 years, unique in terms of industry we are talking about, but that is from heritage perspective only. Then although both the brands are German, both have completely different personas, completely different identity and brand promise.

When we are talking about Siemens we are talking about futuristic design, we are talking about inventions, we are talking about technology and that kind of personification. It is a very premium brand. When you are buying Siemens, you are buying future, a technology that is future proof.

When it comes to Bosch, it has a completely different personification. It is about the quality. The most important thing is about being a trustworthy helpful friend, someone who can come into your daily life and help make it better every day, so
that you can use the spare time towards your own personal or professional pursuits. That is what Bosch is all about, it is about making life better.

Siemens is positioned at premium level that falls right below the luxury level. When we talk about Bosch, the brand is positioned in the mass premium space. Last year, we launched the luxury offering, Gaggenau meant for the discerning individuals in India. We believe that the Indian consumer durables sector is witnessing an inclination towards luxury products in the last few years and are
confident that this is the appropriate time for a brand like Gaggenau to enter the market.

Que – Which categories are you present in India now? Which ones are you strongest in?

GS – We are present in washing, cooling, cooking, dishwashing and small appliances categories with products like mixer grinder etc. Our presence in the all the categories are different because we have started a limited portfolio in all categories. Our strategy is to develop our portfolio in next three to five years to access more than 60-70 per cent of the unutilized category.

Our portfolio is strong in front loaders, we had introduced new top loaders in the country nine to ten months ago. We also have a strong presence in premium cooking and dishwasher portfolio but the market size in these two segments are small. However, when it comes to cooling or refrigerators, our portfolio is not very strong currently.

In terms of small appliances, we have just started launching mixer grinder ranges starting from South market. The entire focus will now be on food-prep appliances. Apart from mixer-grinders, we have a range of products that includes hand blenders, food processors, slow juicers toasters and kettle.

Que – How has BSH’s journey been in India till now?

GS – Five years back we hardly had anything, we were only importing some home appliances like washing machine and refrigerators. Over the last five years, we have grown by five times. We have added several products and expanded our portfolio.

Today, we have even launched a front load washing machine developed in our Chennai factory. Post this launch, our share has also increased to more than 20 per cent. Previous year, we had launched a top load washing machine which also was a huge extension to our portfolio. The washing machine vertical is doing quite well for us. In cooling vertical, we have launched a few models of refrigerators, which are made in India.

We are constructing our own refrigeration company in India, and in the next couple of years, we will launch a new range of refrigerators. Similarly, in the cooking appliances category, we had launched several ranges of premium built-in products under the Siemens brand.

Que – Talking about products and technology, what is your take on the use of IOT and smart features in home appliances? Do you think smart home appliances will lead the future?

GS – That’s there to come, not only in India but across the world. Efforts are going on how to make use cases which are practical and useful, and to make sure how to make usages seamless. You cannot call a couple of smart appliances a smart eco-system. Instead, we are focusing on having smart homes where the entire home is connected, your cooking, lighting, security system and everything else.

Embedding IoT or smart features is our new strategic direction, which is hardware plus for BSH. Bosch and Siemens will be bringing in a lot of connected products to India in the next two to three years. We have been doing a lot of testing and will continue to do it for next 12 to 18 months to check the performance, usability and the feedback we get in the country.

Que – What are the challenges that you see in the Indian Consumer Electronics Industry? What is your strategy to address these challenges?

GS – India is an under-penetrated market. Most categories we are talking about have only 10 per cent penetration level. Refrigerators probably have the highest amount of penetration among these segments. Every other segment has a single digit penetration. A huge number of households and consumers still don’t own a proper home appliance.

Mixer-grinder or cook-tops might have a larger reach but when it comes to built-in appliances, the penetration is less than one per cent. Our strategy is very clear and is based on the way we see the market. It is a fact that a consumer’s first purchase in the home appliances segment will always be a very basic product and we are focusing on that now. Then there’s a parallel market where the upgradation takes place. People using semi-automatic washing machine move to completely automatic ones. This trend follows in every vertical and is a focus area for our strategy in India.

Challenges will be there in terms of managing reach and expansion because we have to reach consumers on 1000 different grounds. India is a country of 5000 cities and towns and may be 5000 villages too. Optimising that reach is always a challenge. Delivering customer support and customer delight across this length and breadth to the country is again a big challenge.

Last but not the least, India is a highly competitive market. So, keeping our brand into mind and trying to give value propositions that are well differentiated, cost effective and within the reach of customers is a big challenge as well.

Que – Speaking about reach and expansion, do you follow any criteria before adding a retailer, direct dealer or reseller in your network?

GS – Our criteria are very different and yet very simple; we go where our customer is going. We would like to cover basic 70 to 75 per cent distribution in any market we enter. Adding a business to your sales network needs a lot of work and understanding. We start by thinking about the reach of an outlet and always keep in mind the kind of impression it will leave on consumers.
We have several strategies to cover a store depending upon its style, including mini chains, large chains or single outlet deals.

As of now we have covered most of the bigger dealers in our network. Most of our expansion in the sales network happens through our distributor network.

Ques – Why should a distributor join your network?

GS – A dealer, channel partner or a distributor starts by looking at the vision of a brand, especially if the brand is new. Several other consumer durables brands are already existing in India. This simply means that they give up something and become a part of our sales channel. We are a full-fledged home appliances company, with multiple brands and commitment to go deep into every category with solutions relevant and affordable to every Indian consumer.

Then comes what we are going to be in future. I still remember that when we went to the dealers in 2014, we rarely had anything. Now, we have expanded a lot. We also present a very credible German alternative to a dealer as compared to other brands he deals with. The second big thing is what they get by being with us. We deal in a very fair manner because that is a part of our culture and our value system. We have the courage to admit our mistakes and to work on improving them.

Last but not the least, the dealer needs to see money, and we are investing in not one but multiple brands, multiple products and in retail and displays. So far, we have got a positive response from all our channel partners.

Ques – What’s your approach towards the service network? What do you prefer, door-to-door service or do you follow servicing through brand centres?

GS – We have a complete door-to-door service model. All products that we sell, we install them and give demo as well. Within the warranty period, after sales service is free. Post warranty service that we provide is also door to door. We have a full network of service engineers and service partners.

This network includes both inhouse and outsourced teams, fully trained and certified by us. These teams work in a way what we call Bosch way where they have special tools and analytics to serve our users. We measure customer satisfaction at each level through a measure called NPS.

Que – What about experience stores, are you planning on opening more exclusive experience stores for your products?

GS – Yes, but selectively. We already have company-owned experience centers in Mumbai, Chennai, Bangalore and Delhi. We have around 60 Bosch and 25 Siemens exclusive brand stores. Basically, we are focusing on top 25 premium cities for Siemens and 100 cities for Bosch.

Que – What are your goals in terms of revenue and profit?

GS – We have been achieving about 35 to 40 YoY growth rate from last five years, and that’s our overall strategy also. We want to become one of the leading home appliances company by 2025, which means having a double-digit share in the market which also translates to 35 to 40 per cent YoY growth. Not only are we launching products in the existing markets, but we are also creating markets for our new products.

We have also started focusing on Hardware plus. It is a strategic shift used by BSH globally, that we now have started following in India as well. The whole world knows that we specialize in hardware consumer durables. Now, we have also started selling accessories with Bosch products in India. The biggest example of this is the Bosch Detergent powder that we started selling here.

In fact, India is the first market in the world to enjoy its hands-on Bosch detergent powder. You would see us focusing more on this Hardware Plus strategy in India. It is a major part of our expansion plan in the country.