Canon plays challenger

‘Boom time ahead’ could be the perfect phrase for Canon India, if one has to go by the performance of the company in the last year. Apart from achieving an impressive 33 percent growth rate in a sluggish market, hitting revenues of Rs 202 crore and acquiring close to one lakh customers, Canon has also managed to grow across all sectors.

For instance, the inkjet printer market business grew by 313 percent, the scanner segment by 656 percent, fax by 180 percent, digital copiers by 242 percent and multifunctional devices by 251 percent in unit terms.

While the figures do look bigger in size due to the smaller base, the important thing to note is that the company has moved into the number two position in two key segments—inkjet printers and scanners—just behind the leader HP. For instance, Canon’s marketshare in the inkjet printer segment zoomed from 3 percent in 2001 to 14 percent in 2002. In the scanner segment too, it is the same story, as the company increased its marketshare from 1.1 percent in 2001 to 18 percent in 2002. (Source: IDC India)

Looking at Canon’s growth performance, it was awarded the Challenger Award in the inkjet printer segment by Skoch Consultancy Services. According to research undertaken by Skoch Consultancy, the Indian market bought close to 5,80,963 inkjet printers in CY 2002, of which Canon sold 87,144 inkjet printers, grabbing a marketshare of approximately 15 percent. Looking at the initiatives launched by Canon, Skoch Consultancy believes that the company has the potential of doubling its marketshare in the next three years.

While today the company is on the right growth path, the situation was not so clear two years ago, when Canon was perceived as a camera and copier company, rather than as a player in the IT peripherals space. Alok Bharadwaj, director and general manager for the Consumer Imaging & Information Division & Volume Products at Canon, knew that if the company had to take on competition (with their established distribution strengths), it had to do something other than react to the strategies of the existing players.

Accordingly, 2001 saw the company evolving and fine tuning its own strategies instead of just countering those of its competitors. In line with this vision, the company reorganised its channel strategy and gave it a regional thrust. Currently, the company has four regional distributors—Compuage in the west, Wellwin in the south, Supertron in the east and Tech Pacific in the north. The regional distributor model was an essential part of the strategy as the company wanted its distributors to build up its brand image. In return, the company gave them protected margins and also went a step further in insuring stocks against price fluctuations.

In an age where distributors were surviving on extremely thin margins and were treading dangerously between highly volatile prices of computer products, Canon’s strategy sent a positive message to the market. Naturally, distributors were happy and were instrumental in building up the brand.

Canon has also been following a conscious strategy to grow its market share in B and C class cities. The strategy has paid off, and company sources claim that Canon has a higher marketshare in these cities as compared to Tier-1 cities. For example, company officials claim that Canon has a marketshare of close to 30 percent in cities like Indore, Trivandrum and Lucknow, while its marketshare in the metros stands roughly at 15 percent.

Canon also paid special attention to building up its distribution strategy. Other than tapping the reseller, Canon also identified corporate dealers, assemblers and retailers to push its products. While resellers generate volumes, corporate dealers bring in the margins. The retailers act as the face of the company and interact directly with the end-consumer. While the assemblers—who are dominant in the PC segment—help Canon take its products across the length and breadth of the country.

Though the distribution logistics were taken care of, the brand image of the company was still not firmly registered in the mind of the consumer. Says Bharadwaj, “Our brand was associated in the consumer’s mind more as a camera company rather than an IT company. Though technologically we had the best products in our stable, we found out that the customer does not want to buy a particular technology, but a particular brand. We talked to various management consultants and finally reached a decision that to succeed in this marketplace we needed to send an emotional message rather than a functional message. Our recent brand campaigns are an effort in that direction and the results have been extremely positive.”

Canon also knew that to retain its competitive edge, it needed to launch new products on a regular basis, especially in an industry where technology soon becomes obsolescent. Accordingly, the company saw to it that new products, which were launched internationally, were simultaneously released in the Indian market. In keeping with this strategy, 2002 saw Canon launch 47 new products in the country. This strategy has not only enhanced the company’s brand image in the market but has also expanded the market for its products.

Despite the sluggish growth rates prevailing in the industry and the extremely tough competition, Canon India hopes to be a Rs 500 crore company by 2005. Thus making it self worthy of being called a ‘Challenger’.

— R P Srikanth