COVER STORY (Switches)

Dealer Decides

The switch market is defined by customer preferences, and dealers are opting for brands that help them target specific demographics

Switch dealers across the country are unanimous about one thing – the customer comes looking either for brand, price or looks. Following a countrywide survey conducted by Sourcing Electricals & Lighting to find out how switches are sold in retail, it was discovered that dealers consider themselves king, confident in the belief that they can convince customers to buy the switch they suggest.
The switch market has three distinct segments – the traditional piano, the fast growing modular, and the futuristic electronic. While the relatively new electronic switch is taking tentative steps to gain relevance amongst home owners, and is unlikely to become a retailer’s darling any time soon, the piano and modular segments are neck to neck in terms of sales. Both these segments are thriving, albeit for different reasons: piano switches are selling in large numbers for their affordability, and are the first choice in the replacement market. Sellers say that demand for these switches will remain steady for the foreseeable future, quite like the case of the incandescent bulb which refuses to fade away despite the surge in demand for compact fluorescent lamps. As for the modular type, their demand continues to grow in tandem with increase in real estate stock in the country, and also because they significantly enhance interiors with their smart looks. The fact that each year sees the launch of more and more new brands of modular switches, and that large electrical companies are also not averse to including them in their products basket, is proof that the modular switch market is set to expand much more dramatically than ever before.
Dealers believe that most manufacturers, both big and small, use Lexan (the polycarbonate manufactured by plastics giant GE) for the body of modular switches, while internal contacts are of brass tipped with silver. Polycarbonate has become so widely accepted that even the economical piano switch is being made from this material. Knowing this, dealers are quite unimpressed by claims of superior quality, particularly by small manufacturers. Colourful cover plates, large rockers and concealed screws, are now standard, and no longer make a significant difference from one brand to another. Knowing this, manufacturers are now looking at adding unique features to their range in order to stand out in the crowd and charm the dealer. But, any advantage gained in this way is likely to be nullified soon, since competitors will rush to incorporate the same into their ranges. Still, innovations in modular switches will continue (see Features to Look Out For).
What’s helping retailers select brands for their product portfolio is the customers’ preference along three clear cut lines: a strong brand recall, the price, and stylishness of the product. According to the dealers, most customers are concerned with only one of these characteristics when they arrive at a retail counter. If they are brand conscious, they already have a couple of brands in their mind which they will not compromise on; if they are concerned about the financial outgo for buying the switches, then they will plumb for the cheapest option available; and if they are more concerned about the aesthetics of their interiors, then they will go for a product that appeals to their eye irrespective of its brand and price. This reality is guiding dealers to decide which brands they should deal in, and which they should pass. Since a dealer can handle only a limited number of brands, he is likely to select at least one for each category that relates to his market’s demography.
Interestingly, the Indian switch industry is split into three camps: national brands Anchor, MK, Mosaic and Crabtree, that hog the largest market share; regional players who have graduated from piano and plate to modular with alacrity; and the new entrants who have recently become enamoured by this market. The national players have invested heavily in brand building; they are at the forefront of quality standards and innovations, and are setting benchmarks on pricing. These companies prefer to have fewer designs and minimal colour options that are acceptable to the largest segment of the market. Regional players find no difficulty in matching up to their larger cousins in quality and features, though they often go a step ahead in the design arena by offering shapes and finishes that appeal to niche segments but bring in higher price realisations.
Krishna Kumar (kk@salzergroup.com), vice president marketing–building electrical division of Coimbatore-based Salzer Electronics Ltd, goes to the extent of saying that his company is a step ahead of many others. “We are the first company in India to offer green switches; that are manufactured without using any harmful or banned substances.” He explains that Salzer’s switches are RoHS (restriction of hazardous substance) compliant, and are made of environment-friendly material. The company is an expert in switch-making technology, since it has been manufacturing industrial switches including cam-operated rotary switches, load break switches, proximity switches and terminal connectors, since 1985. And with its new range of modular switches, it has shown that it is consious of good designing as well.
Mumbai-based Kala Electrical Industries’ Safecon brand of switches are also rich with front line features such as springless mechanism and glass cover plates. “Springless mechanism results in very low arcing, irrespective of the connected load, thereby enhancing the life of the switch. We are the first company in India to use this technology,” claims its managing director Kapil Joukani (safecon@hotmail.com).
Veto Gold, the metal plate switches from Veto Switchgears & Cables Pvt Ltd in Mumbai, already successful in overseas markets, has created a niche in domestic markets as well. According to its managing director Kishore Kumar Gurnani (vetoindustries@yahoo.co.in), Veto is the pioneer in piano switches and obtained BIS certification for its products way back in 1967. “Our export office in Dubai markets our products in Africa, Burma, Pakistan, Bangladesh, Nepal and Sri Lanka.”
However, it is the pricing strategy that reflects these companies’ aspirations. While most regional players believe in marking their products lower than the market leaders, a few such as Salzer and Veto are trying to match top-end prices, an indication that they have national aspirations. Dealers feel that if these companies have to succeed, they will have to match the leaders in brand building activity as well.
Agrees Joukani, “As far as promotion is concerned, the small sector has been unable to keep up with large players. But that does not mean we do not invest in building our brands, even though we may not have pre-assigned budgets for promotional activities. We have recently participated in AceTech and Elecrama exhibitions, and plan to participate in the forthcoming Inside Outside Megashow in Lucknow,” he informs.
“In terms of quality we are at par with the leaders, even though they score over us with respect to market visibility. What they spend on advertising and publicity, we would rather spend the same amount on quality enhancement. So whether we advertise or not, our market goodwill remains intact due to our consistent good quality and commitment to our channel partners across the country,” adds Gurnani. According to him, the small scale switch industry as a whole is growing by leaps and bounds, and in another five years it will be as conspicuous as the large players.
In a similar vein, Achut Hegde (tobyswitches@vsnl.net), director of Bangalore-based Toby Electric India Pvt Ltd, says, “Being a small scale manufacturer, we cannot afford to spend exorbitantly on advertising and marketing. But we do take part in exhibitions and popularise our products through architects and builders.” He asserts that Toby, whose products are BIS-certified, uses the latest technology in its manufacturing processes - the same that large manufacturers like Anchor and Legrand are employing. “Our manufacturing costs are low, as a result of which we are able to offer our dealers healthy trade margins. Consumers too find it financially viable to purchase our competitively priced switches. So, there are twin benefits for our dealers.” While Toby has a strong presence in Bangalore and Hyderabad, it is keen to establish trade partnerships in the north, particularly in UP.
Delhi-based R J Electricals prefers to invest in providing support to dealers, particularly for marketing to institutional buyers for project sales. According to Rakesh Budhiraja (info@tinselswitches.com), vice president of the company, trade discounts of up to 50%, and generous display support are part of the company’s promotion package. “We give our dealers tailor-made solutions depending on the space they have. We also involve them in ongoing project sales in their area.”
Similarly, Vikram Solanki (info@vimalswitches.com) of Vijay Electricals says that apart from offering attractive trade discounts, his company gives strong support to dealers. “We provide point-of-sale materials like banners and hoardings. Besides, which we take part in exhibitions to increase our Vimal brand’s visibility.”
But it is the new entrants that are under pressure to differentiate themselves as low-voltage solution providers. Most of the new brands that have emerged across the landscape during the past 2-3 years belong to companies that are already well-entrenched in the electrical and lighting industry and have deep pockets. With modular switches they hope to further endear themselves to their dealer network, and leverage their brand position amongst consumers. They are not shying from pricing for the top end of the market, as they claim that their offering is at par with that of market leaders.
MCB major Indo Asian Fusegear Ltd has entered into a joint venture with Spain-based Simon, to offer large-sized premium switches under the IndoSimon brand, as well as the Haussman range of mid-segment switches. The two ranges are expected to be launched shortly in Delhi, following which they will be available to the company’s circuit breaker and CFL dealers across the country, besides being present on shelves of home improvement retailer Home Town’s eight outlets. Comments P K Ranade (pranade@indoasian.com), joint managing director of the company, “As far as our USP is concerned, our switches have been tested for more than 1,40,000 operations. We are a new entrant in the switch business, and are sure that consumers will appreciate our switches because we are known never to compromise on quality. And as far as the trade network is concerned, renowned dealers and distributors are eager to join hands with us.”
Interestingly, clock and CFL maker Ajanta Ltd has taken a far more aggressive approach for its Orpat range of switches. In a move that could possibly redefine pricing strategies of many companies, it has priced its switches at the bottom rung of the market, while claiming to offer quality at par with switches of market leaders. “Our prices are 10% higher than those of the unorganised players, 30-40% lower than those of the leading brands. Our modular switches are made of fire-retardant and heat-resistant virgin polycarbonate. They can endure 1,00,000 operations and temperatures up to 960oC,” informs director Nevil Patel(nevil@orpatgroup.com).
Ajanta is planning to appoint another 50 distributors to its team of 110 during the current fiscal. “With Orpat products trade partners have a natural advantage, since the brand is well known and visibility is not an issue,” asserts Patel. “We are also trying to make inroads into the renovation segment. Our sales team will be working closely with developers and architects, as we are targeting B2B buyers as well.
But retailers feel that new entrants need to do more than simply have the right product and the right price. More crucially, it is felt that these companies will have to invest significantly in brand building before they can be accepted as switch specialists by consumers. Till then, dealers will have a difficult time deciding if their switches are to be categorised on the basis of brand pull, price or looks, and the manufacturers will continue to be squeezed between national leaders and regional satraps.
Another fact that emerges from the research is that regional players are difficult to dislodge from retail shelves, and most of their trade partners are extremely loyal. This is probably because the rewards of dealing in these brands, which may not be top-of-the-mind, are indeed quite attractive. Backed with trade discounts that equal or are even better than those offered by market leaders, the dealer is strongly positioned to divert buyers towards the brand of his choice without compromising on his own outlet’s equity.
So, the picture that emerges of the switch trade channel is that while leading brands are preferred for the higher returns on investment they promise, regional brands command loyalty due to higher margin on sales. The dealer, who is thoroughly spoilt for choice, is calling the shots, with the option of going with a name that suits his risk profile.

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