Brands. vs. Non-brands

My previous post was about the power of brands. But then, are there cases where brands fail to entice a consumer into making an actual purchase?

Sure, there are. Take the PC markets in India. The Indian PC market crossed 5 million units last year. A growth of 25 per cent year-on-year in unit shipments over the previous year. In India competition is rife between branded PCs and assembled ones. Assembled machines are for the moment doing much better than the branded ones.

According to IDC, a markets analyst firm, the share of assembled desktops, also known as ‘white box’, shipments has declined from 41 per cent in the third quarter of calendar year (CY) 2005 to 32.7 per cent in the first quarter of CY 2007. However, the dip in the numbers has to be co-related to the fact that the desktop PC market has had a flat growth for two years. Though the year-on-year growth of the assembled PC has been flat, it has not lost its market share of close to 40 per cent of the over all desktop PC in India. In addition, the desktop market is not moving even for the branded computers.

Now, why are assembled machines doing better than branded ones in India?

One, due to their proximity to the end-customer and the personalised services, they often provide. It is precisely due to this reason that the assembled market is sustaining itself despite stiff competition and attractive offerings from branded PC players.

Two, buying the ‘white box’ is always cheaper than purchasing a branded PC. The price difference of a normal low-end PC will be just about 5 per cent, but in a high-end PC it can be as much as 15 per cent to 20 per cent. This is because assemblers do not have to account for the marketing and branding costs.

The other reason for the assembled PC market sustaining itself is the ease of upgradation, which most branded PC vendors do not readily offer. Assembled PC providers are also perceived to offer better service support. Most of the branded PCs do not give an option to mix and match components of the PC due to compatibility issue.


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