Olympics expected to intensify price war for electronic goods

The market for electronic goods seems to have escaped the general downturn in consumer spending and a boom is expected next year, particularly in view of the Olympic Games. Yiannis Gratsonis, marketing manager at Sony Hellas, says in an interview a price war is in the works, spearheaded by Samsung and LG Hellas. How far did the war in Iraq affect the Greek market for electrical and electronic goods? Before the hostilities began, there was an ill-conceived optimism that the war would be over in a matter of days and the market was not affected. As things did not go as expected, there was a sudden drop in sales, but after the third week, when the end was clearly in sight, we returned to the levels at the start of the year. The Easter period was very good, but unstable weather affected the market for air conditioners. Last year, a number of chains invested a great deal of money in large stocks of air conditioners which they did not manage to sell and were forced to sell at large discounts in the winter. This year, everyone is more careful. What was Sony’s market share in the first quarter? In the «black» appliances segment, we have estimated our market share at 40 percent and project a 3-4 percent rise this year over 2002. We believe it is a year of expectation, ahead of the boom before the Olympic Games next year, which will create a positive psychology for such things as television sets, video cameras, DVDs and digital cameras. We think this will result in a rise of 7-8 percent. What do you see after 2004? We forecast a decline, a return to 2003 levels in 2005. Of course, I am referring to sales turnover, where increases are harder to realize, given that new products are always cheaper than existing ones. Which firms follow Sony? Phillips is second in market share, with about 23-24 percent. Samsung, boosted by its sponsorship of the Olympic Games, is moving ahead dynamically but its share is still around 6 percent. Below that, the list is crowded with dozens of brands, such as Panasonic, Thomson and Canon. Do you worry about the possibility of a price war, mainly arising from the aggressive policy of the South Korean firms, such as Samsung and LG? I do, as these two competitors are usually very aggressive in European markets as regards both markets and prices. The price war will mainly be between them, particularly as LG is targeting the third largest market share by 2005. To achieve this, they must invest a lot of money in promotion and advertising and reduce prices. Sony does not intend to take part in this war, both because of market position and name. Our strategy is always based on quality, not price. But will not this situation put some pressure on Sony? Will you not be forced to adapt your strategy with special offers and other activities? Sure. Our efforts will aim at convincing customers that we offer great added value and the best combination of product. The truth is there will be pressure on prices, to the benefit of consumers. Our main advantage is that according to statistics, we have the lowest rate of faulty products. Do you plan to improve after-sales service? We are already making great efforts to this end, although we recognize there’ll always be a consumer we won’t be able to keep happy. Our general policy is to respond immediately, for instance, by delivering goods that are not easy for the customer to transport, such as television sets. We also aim to have a balanced geographical spread of services and accessibility to our switchboard, as most problems do not concern service but the operation of appliances. Which products were the most popular in the first quarter? Digital cameras, video cameras and DVDs, despite their high cost. DVD is combined with home cinema systems, where sales are very good. What is the situation of retail chains after the sales financing war and mistakes in locating outlets? Most chains are now coming to realize the problems created after 1999 and making serious efforts to cut costs and rationalize operations; Multirama is a characteristic example. They have reduced staff and are renegotiating leases. Even though bankruptcies are still a theoretical possibility, I do not believe this will happen and I feel that banks will help the situation by agreeing to renegotiate consumer loans. Was consistency in payments to suppliers such as Sony affected by the difficult situation in which chains find themselves? No, the number of bounced checks remained generally stable. On the other hand, we take care not to pressure retailers to order more goods than they can handle.