Electronics giant aims to be back on top by 2019
THE Panasonic brand is one that needs no introduction. It has over the years become a household name among Malaysians.
However, stiff competition has toppled the brand as the top in the consumer electronics segment.
“We used to be number one ... we dropped five years ago so we are now number two,” says Panasonic Malaysia Sdn Bhd managing director Cheng Chee Chung.
Cheng, who came on board only on April 1, is determined to get the brand back to its rightful place.
“The behaviour of a leader and a challenger is different. We need to aim to get back to number one again. It is my mission for the company. We target to get back hopefully in the 2018 fiscal year ending March 31, 2019,” he tells StarBizWeek.
To achieve this, Cheng has targeted for the company to record a minimum 10% growth every year until 2018.
“In our lineup, we have almost everything in the consumer electric business ranging from AV products to home appliances to kitchen to living to beauty to system solutions to batteries to solar panels.
“In order to grow, it’s not easy.
“We are a RM1.6bil turnover company. So it all depends on the demand growth, which has a lot to do with the economy,” he adds.
Also a key performance indicator for the company is to grow its market share for each of its product categories.
“It is challenging but it is not impossible. Our direction is always change and challenge. Once we decide the amount to challenge, we need to decide what to change,” Cheng says.
Panasonic’s products can be segmented into two - AV/TV systems, and home appliances.
It is the TV business that has become very challenging in the last few years as various new brands have flooded the market.
“The competition is very keen. We are now fourth. But in terms of appliances we are still number one,” he says.
Cheng adds that the air conditioner business will remain Panasonic’s key driver for growth.
Currently it contributes 27% to the company’s total sales, followed by the TV segment.
He admits that Panasonic’s range of products tend to be between 5% and 15% than its competitors’.
“Therefore it is important for us to explain to consumers the value of our product,” Cheng says.
This entails Panasonic educating consumers on the design, features and benefits of its products.
“Consumers these days are smart. They want to compare prices and see how they can save. We need to explain that our products are value for money,” he says.
Panasonic is doing this through four pillars that are planned and designed to explain the benefit of its products.
“This is through the touch and feel to the customer,” he says.
One of the pillars is Panasonic ECONAVI, which is the company’s range of smart and eco-friendly products.
Products within this range are able to sense the surroundings and then smartly adjust its functions so it will eventually save energy,” he says.
The other pillar is Panasonic Cooking, featuring the company’s cooking appliances. Cheng says the company has a Panasonic Cooking caravan that helps promote this range of products.
“The caravan parks in front of our dealers’ shop and does product demonstration to promote the it,” he says.
Panasonic also has a wide range of beauty products that are not as well known, compared with its other appliances. “These include hair dryers and facial steamers. We are also bringing in new series of products such as eye massagers,” he says.
From October onwards, the company is expanding its product lineup.
It is also currently working on feasibility studies to bring built-in kitchens to the market. “We are now studying various possibilities to collaborate with the kitchen equipment players in the market,” he says.
Cheng adds that Panasonic is looking to tie up with more property players and offer their products.
In the last financial year, ending March 2015, this segment contributed 10% to the company’s sales. This year, it intends to bump it up to 15% and 25% by 2018.
Cheng’s appointment as managing director interestingly coincides with the implementation of the goods and services tax (GST).
“When I took over this position it coincided with GST. Everyone knows by now, that after it came into effect, generally prices went up. Consumers became very cautious as they are facing higher living costs now. In the consumer electronics market, just before April, there was suddenly a big rush to buy. Come April, sales drastically dropped. The sell out was about 40% to 50% lower,” he says.
In May, sales dropped 20% to 30% compared to a year earlier. Although the market shows signs of recovery, sales are still lower than last year, he adds.
“It’s not just GST. It’s also about the depreciating ringgit,” Cheng says.
To deal with the softer market, Panasonic embarked on a few strategies, including sell-through activities. The company participated in road shows like the Home Decor and Design Exhibition, as well as Perfect Livin to encourage sales.
It is also started more localised marketing activities. It has collaborated with Astro’s Pelamin Fantasia, a reality show for couples to realise their dream weddings.
To build momentum for Hari Raya celebrations, Panasonic is running its ‘Fulamak Bestnya’ campaign from June 8 to July 19.
“It is difficult to predict when the market will recover. We are taking a lot of steps and hopefully when people get used to GST, the market can recover. We can’t sit and wait,” Cheng says.
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