Zenith and the art of contrarian pricing

Mumbai: The Rs 300-crore Zenith Computers Ltd's laptop strategy called the 'Power of Seven', which was launched in 2004 has helped push up the sales of its laptops. Zenith's strategy was to move up the value chain focusing on the high-end laptops segment, unlike the volume strategy of those who were trying to develop the sub-10,000 PC.

The company opted to cater to consumers who preferred a fully functional PC or laptop depending on their application requirement compared to a low-value, low-cost PC. Market analysts like IDC India too were sceptical whether consumers would really go to the market to buy low-priced PCs.

Zenith's strategy to move up to the higher end of the spectrum proved successful. Since laptops are a high margin product, increase in laptop sales have significantly added to the company's bottom line.

According to IDC, notebook shipments for the Asia region grew by an astonishing 54 per cent year-on-year, while desktop PCs only grew by 12 per cent over the same period.

This also boosted their profitability in the last fiscal year after entering the laptop segment. In August 2004, Zenith launched seven laptops as part of its 'Power of Seven' strategy. The sales of Zenith's laptops increased 350 per cent within two quarters. Zenith is the only Indian brand to register a volume growth of 350 per cent in 2004-05.

"This was a result of introducing high-end products and backing them with superior quality control and distribution," says Raj Saraf, CMD, Zenith Computers Ltd. "We also gave high priority to the success of our channel-partners at every level — our strategy has given our channel partners high margins, while providing superior products and services. This has been a win-win situation for both; our channel community and us," adds Saraf. Incidentally, Zenith has the largest exclusive dealers channel in India. Zenith now plans to increase its retail stores from 450 to 1,000 in 240 cities across the country by end 2006.