Thursday, June 4, 2009

Get LG Ac in the price of Desert Cooler

South Korean consumer durables major LG Electronics, which triggered a demand for low cost air- conditioners in India, has now set itself another ambitious target: ACs for the cost of air coolers.

The South Korean white goods manufacturer is eying the lower-middle class consumer who largely continues to use water-based coolers, also known as desert coolers, to beat the summer heat.

"We are studying the desert cooler market in India. The number of users are predominantly more in the north because of the extreme temperatures in the region," Yunju Song, a Seoul-based marketing strategist with LG, told a visiting IANS correspondent.

India's largely unorganised desert cooler market, concentrated in the drier states such as Rajasthan and Delhi, stands at around a million units annually.

A cooler costs around Rs.3,000 - around one-third the cheapest AC available in the country. If one were to compromise on quality, the price would go down further.

It is this segment that is being targeted by LG - which claims to have the largest share of the 2.2-million unit, Rs.4,000-crore Indian AC market.

As it might not be possible to bring down prices to levels commanded by coolers, the company is planning to make its new offerings economical to lure cooler users into upgrading to ACs.

"The pricing would be economical. I can't say how much it will be right now," said Yunju.

But there are two major challenges that LG will have to contend with to make its low-cost ACs catch on.

A one-tonne AC costs around Rs.9,000-Rs.10,000. A desert cooler of 15-litre capacity costs around a third of this. Thrifty buyers generally ignore its lesser cooling power and the noise it creates.

Then there is the running cost. An AC is among the largest guzzlers of electricity among household appliances, and monthly electricity bills can increase by Rs.1,500 to Rs.2,500 for using it.

On the other hand, the operational cost of a desert cooler is estimated to be about 80 percent less, a definite plus in its favour.

But LG is banking on other aspects to push its product. "Desert coolers are not healthy, microbes breed in the humidity (caused in a room by a cooler)," Yunju said.

With this in mind, LG plans to introduce some basic health features that it has incorporated in a new range of ACs that it says can remove allergy - and asthma-causing dust and microscopic contaminants.

"We will look at introducing some of these features in low-cost models in the future," said Simon Hahm, vice president of LG Air Conditioning, who had helped start his group's operations in India in 1997.

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