Distribution and Sony World

"We are bullish on India," remarked Sony India's managing director, Hiromi Matsumoto, at a recent press meet in Chennai. "We are now consolidating the company's infrastructure." But ask him about critical numbers like market share and turnover and he ducks, saying, "Chasing market shares might make us lose sight of the basic business functions."

What is it that Matsumoto is trying to build as the company's infrastructure? The answer is: strengthening the company's distribution network and also investing on logistics  management.

Distribution and Sony World

Sony India currently has 33 distributors and 1,475 dealers throughout the country. The company's three service centres and 89 authorised service stations back them. In order to strengthen and also build upon this, Sony India has decided to extend the idea of Sony World, an exclusive retail outlet -- owned by a franchisee -- at Calcutta to other cities in the country. Sony World showcases the company's entire product range: colour televisions (CTV), audio systems, digital camera range, handycams, DVD players, floppy diskettes, telephone instruments, dry cell batteries and so on.

"Apart from the regular line, Sony World would be the test pad for the group's latest digital line-ups," says Matsumoto. As per plans, Sony India would be opening 13 more of Sony World outlets by the end of this month, and double that number next fiscal.

The new showroom concept seems to have caught up well amongst the consumers. Says Prem Nair, deputy director, sales, "The Sony World we opened in 1998, contributes about 30 percent to the Calcutta turnover and is ranked amongst the top five performers for Sony India in that region."

Infrastructure restructure

Sony India is simultaneously focussing on strengthening its other infrastructure. The company has invested a sizeable sum in beefing up its communication networks between regions, warehouses and factory, byconnecting all of them via leased lines and VSATs.

"We will also complete the first phase of SAP, codenamed SINPO2, that provides a uniform software platform for key factory functions such as despatches, finance, logistics, sales and marketing," Matsumoto explains. The company has spent about Rs.3.5 crore in this area.

The other unique infrastructural investment is in building chill rooms at its warehouses to house delicate products such as floppy discs, says Nair. "Our strategy is simple. Duplicate here, the successful strategies employed by Sony Corporation overseas. That is, launch new products at regular  intervals. For us, India is not unique. Abroad, we have successfully faced competition from other foreign brands that are now in India."

Products and performance

It may be recalled that Sony India launched its Wega series of flat screen CTVs, forcing many other players to follow suit. What is interesting here, is that the company launched the flat screen CTV immediately after it was introduced in the overseas markets.

For Sony India, production capacity is not a constraint. At its factory at Haryana, it has a massive CTV manufacturing capacity of three lakh units per annum, For audio systems, the capacity is one lakh units. The company rolls out 17 models of CTVs, 10 models of hi-fi portable audio systems and a car audio system already.

Ever since the factory was built in 1995 at an outlay of Rs 10 crore, Sony India has been consistently increasing its investments on it. As of date, the total investments made stands at Rs 65 crore.

Sony India broke even in 1997-98, two years ahead of initial plans. It is now targeting a turnover of Rs 1,000 crore by 2001-2002.

This fiscal, the company claims 6to have sold about 1.9 lakh CTVs and 70,000 audio systems. According to Matsumoto, Sony India would close this fiscal with a turnover around Rs 600 crore. While CTV sales contribute about 65 per cent to this turnover, audio systems and other products share the balance. Speaking of the car audio systems, Nair says that Sony India, while supplying to Fiat under its own brand name, also does job works for several other car manufacturers.

Alongwith its thrust on building infrastructure, the company is planning to start a series of  promotion campaigns for which a sum of Rs 40 crore has been budgeted. "We will be spending Rs 20 crore on media campaigns and the balance will be for dealer promotion strategies," Nair says.