Name: Dhananjay Chaturvedi
Designation: Managing Director, Miele India
The Challenge: To define and create a market that didn’t exist, and to convince customers who had the money to buy a luxury product but questioned spending it on something that would be hidden inside the kitchen
How He Did It: Chaturvedi unlearned practices that he had mastered selling mass products for almost two decades, but brought in all his knowledge of the local market, innovating Miele’s global practices to suit local consumer tastes and market conditions in India
I was being interviewed by Miele’s head for human resources when I first realised that this job was going to be completely different from my earlier ones. We were talking about automobiles and he asked for my opinion on brands like Toyota and General Motors. I answered that these brands represent value for money and dependability. Then the HR head asked me what I thought about brands like Maserati, Bugatti and Rolls Royce. After I added my bit, he said, “These brands may not sell as many as a Toyota. But very few people get to work for them. Here, a higher level of marketing and sales effort is required. One needs to unlearn and acquire new skills.” This excited me and played a big factor when I joined Miele in 2008 after spending over two decades in the mass consumer goods and home appliances sector, including stints in LG, Philips and Onida.
Miele is a Germany-based luxury home appliances maker, set up in 1899 by Carl Miele and Reinhard Zinkann in Gütersloh. The company initially made butter churners, then cars and motorbikes before specialising in luxury domestic appliances like dish washers, vacuum cleaners, washing machines and refrigerators. The prices vary from Rs 23,000 for a vacuum cleaner and Rs 1.6 lakh for a rotary ironer to almost Rs 9 lakh for the Mastercool range of refrigerators. That was quite different from products that I was selling in other companies, which cost at least five times less and lasted an average of 5 years, compared with 20 years for a Miele appliance.
But it was not just the price tags or the shelf life of a product that differed. To sell a mass consumer product, one needs to penetrate the market by creating an extensive sales network. We place the products in retail outlets, displaying them prominently. We come out with various “schemes,” including discounts, freebies, exchange offers and financing options. Products have to be full of features and need to sell on the “value for money” proposition.
Luxury brands, on the other hand, need to be more restrained and create a sense of timelessness around their products. A Miele refrigerator will not have a fancy colour like wine red that will go out of fashion within a couple of years. Miele products are either in white or natural steel. For us, distribution and marketing is selective. We do not bombard television, newspapers or billboards with advertisements. If mass consumer goods are chapters 1 to 21 in the book of marketing, then at Miele life begins at chapter 101.
The domestic market didn’t have a distribution channel to sell such a premium home appliance. In fact, the only Miele products present in India came through customers who had bought them overseas and brought them home. Also, Miele usually partnered with fellow premium brands that make kitchens, including the modular ones. But in 2008, there were few premium kitchen brands in India. For us, the presence of premium kitchen brands in a market is a sign that we should enter it, because only in a kitchen that cost upwards of Rs 20 lakh do we have any chance to sell a Miele product. When I learned about these challenges in my first year at Miele, I wondered if I had made the right call!
But we had experience working in the Indian consumer durables market, and backed by a few research studies, we decided to enter. And our choice of the first few markets in India reflected that experience. We set up service centres and warehouses in three cities–Delhi in the north, Mumbai in the west and Bangalore in the south.
These three serviced other markets in which we were present in their respective regions–Ludhiana in the north; Pune, Ahemdabad and Surat in the west; and Hyderabad and Kochi in the south. Many people have asked why we chose Kochi and not Chennai. Thanks to its NRI population, a few luxury modular kitchen brands were present in Kochi and not in Chennai.
Moreover, Delhi might be known for its ostentatious lifestyle, top cars and mega weddings. But in Kochi, the value of an average kitchen sold is three times the average sum in Delhi! Later this year, we are going to enter Chennai too.
Among other cities where we are present, Surat and Ludhiana didn’t have any premium kitchen brands, but our research showed that they have an appetite for Miele products. So in Surat, we tied up with a leading sanitary and hardware dealer. This guy has a four-storied shop with all leading brands of fittings that come in a house, including furniture and bathroom.