RK Caprihan's Kelon makes a soft entry in a hard market

Samrat Bose

agencyfaqs!

NEW DELHI

Competition beware, there's a new price warrior in town. RK Caprihan, an ex-Kelvinator, ex-LML and ex-Samsung hand, has launched The Kelon Corporation with the aim of distributing Chinese-made consumer goods and passing on the price benefits to the Indian consumer. Taking advantage of the gargantuan scale of production in China, Caprihan has started importing colour television sets, VCD and DVD players, washing machines and microwave ovens.

The first phase of Kelon's operations cover north India. The distribution set-up is operational in Punjab, Himachal Pradesh and Delhi. The target is to reach at least a five-figure mark for CTVs and VCD players in the latter half of the year through the 75 to 80-odd retailers in Punjab and Delhi and 25 retailers in HP. The launch in Jammu and Uttar Pradesh is slated for the end of this month and a crack at the southern markets is being planned for Diwali-Dussera time.

Right on track, Kelon sells an average of 400-500 CTVs a month, claims Caprihan. It has already shattered a few price barriers with a 14-inch flat (not pure flat) CTV selling at Rs 5,000, a 21-inch TV selling at Rs 7,500 and a 29-inch set at Rs 14,000. Other products in the portfolio are priced equally competitively - with a fully loaded VCD player (FM radio, in-built speakers, audio CD player, MP3 payer, two joy sticks and 300 video games) going for Rs 3,500 and a microwave oven for Rs 12,000. Plans are afoot to break the ceiling for DVD players by selling it below Rs 10,000 and 1.5-ton split air-conditioners for Rs 32,000. Caprihan is also contemplating introducing LCD monitors but is wary about, "putting a hand in a market we know very little about".

Kelon hopes to thrive on price advantage by keeping its overheads low. The manufacturing of the durables is contracted to various Chinese companies with NT Electronic Shopping Pvt. Ltd, (parent of The Kelon Corporation) looking after the logistics of selling in India. But before stretching itself fully, the company is working at putting in place an after-sales and service operation to honour its warranty commitments.

Is Caprihan taking off from where Kabir Mulchandani (of Akai/Aiwa fame) left? The prince of price wars seems to have lost some steam recently using this low price strategy for survival. But there are some distinct differences here. For one, Caprihan is the owner of the brand while the latter was only marketing brands for others. Also, Kelon has a healthy double-digit margin, which, it hopes, would help it break even.

But the big difference lies in the marketing strategy. The target audience seems to be the low-end consumer and competition stems from the unorganised players in the CTV segment. "The cost structure is such that we are targeting the small town, rural and semi-urban areas," says Caprihan about his objective. He is also sure that the niche he plans to capture is not in direct competition with the established players. He is banking on the fact that being small, it would also help him deflect attention of the big guns, "We are too small a player to bother them," says Caprihan. The opposition, therefore, would come from the likes of T-Series, Beltek, Jolly, Bush and Western.

On being asked why the manufacturers in this segment are intermittent advertisers unlike the known brands, he replied, "What's the need? They sell in big numbers anyway." But Kelon will be supported by a print campaign in vernacular dailies visualised by Indus Advertising. The mainstream press and television have been given the go by for now.

Caprihan is familiar with strategy in the cutthroat world of durables marketing. After successful stints with Kelvinator, LML and Samsung India, the new venture provides him with a platform to concentrate on his core competence without the impediments of manufacturing. Hopefully, he would be able to orchestrate another success story from a humble beginning at Zamrudpur (an upcoming corporate locality in south Delhi) that will herald the coming of a new entrepreneur. © 2002 agencyfaqs!