Page 86 - DMGT547_INTERNATIONAL_MARKETING

Unit 4: International Legal Environment

Notes

Caselet Grey Market Dominates VCD Segment

As technology marches on from video cassette recorders (VCRs) to video compact discs
(VCDs), it is the grey market that dominates the segment.

Ironically, if the cable TV boom was responsible for the dip in demand for the VCR, it is
the same cable operator who helped the VCD to thrive as he chose to use it as a replacement
and cheaper alternative to the laser disc (LD) when beaming to households.
“The cable boom certainly has a significant role to play in contributing to the decline of
the VCR segment. In a way, even before the VCR segment could make an impact in the
Indian market, it began to be replaced by the stand alone VCD segment, which saw
increased sales in the Indian market. The easy availability of affordable VCD software and
hardware in the grey market drove this boom. Interestingly, as per estimates available,
the grey market for VCD players has been growing year on year,” Mr R Zutshi, Director,
Samsung India, said.
The market size of the stand alone VCD product in the country (organised sector) would
be around 4.5 - 5.0 lakh this year and its contribution to the total VCD market would be
around 20-25 per cent. “That is to say, the bulk of the VCD market is dominated by the
unorganised or the grey market,” he said.
Mr Zutshi further added that, “VCD prices have certainly seen a dip over the years.”
“The Indian entertainment industry has certainly come a long way and in the future we
expect the consumption patterns to show a market shift— the penetration levels for VCD
players and the mini hi-fi systems will grow in the smaller cities and semi-urban markets
even as urban consumers shift to micro or mini audio systems, mini cross over products
and home theatre systems,” he said.
“VCDs not only introduced a completely new home entertainment concept to Indians but
also highlighted the fact that one must go for a complete home entertainment package. In
India, consumers are increasingly looking for the latest technologies thanks to the products
enabling digital networking between electronic devices,” Mr Leichi Sakamoto, Managing
Director, Sony India Pvt. Ltd. said.
Further, he felt, that as far as price rationalisation was concerned, it was only natural in an
expanding market. According to Mr VV Gosavi, Senior Product Marketing Manager, CD
Business, Philips India, the segment was highly price sensitive and the category has seen
heavy price erosion in the past one year.

However, price sensitivity notwithstanding, the VCD segment is expected to be the fastest
growing.

Said Mr Kishan Kalani, Chief Operating Officer, Oscar International, “Today, the VCD is
undoubtedly the fastest growing segment of consumer electronics. This trend is expected
to continue in the next few “ In fact, industry analysts feel that fuelled by low prices
offered by branded domestic players coupled with warranty and greater penetration in
semi-urban areas, the organised sector in the segment could definitely strengthen its
position.

Source: P K Vasudeva, International Marketing, Excel Books.

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