We Will Invest Rs 60 Cr On Adv During Upcoming Summer Season: B Thiagarajan, Blue Star

It is an exciting time for Blue Star India, which is revelling in an uptick in its overall business on the back of the weather forecast, IPL, overall economy outlook and positive consumer sentiment. The brand has not only been successful in weaving together its legacy, innovation, technology, customer satisfaction and brand value, but the past 80 years of its existence are a testament to its reimagination and reinvention, demonstrating the brand's evolving and competitive nature.

Its Rs 8,000 crore revenue in 2023 and 10,000 retail outlets across the country further signal the brand's unwavering spirit and strong foothold in the market. "We are aiming for 15 per cent market share by FY26 in the room air conditioner segment," informs B Thiagarajan, Managing Director, Blue Star. 

On Growing Demand

The market for room ACs is witnessing significant demand owing to burgeoning middle-class consumers with higher disposable incomes who now perceive the category as luxury. Blue Star is also experiencing demand from first-time buyers, especially in the Tier 2, 3 and 4 markets, as well as the replacement market. "Close to 90 per cent are first-time buyers and about 65 per cent of our sales come through tier 3, tier 4 and tier 5 markets. Additionally, 50 per cent of the AC sales are happening through consumer finance," attests Thiagarajan.

Driven by the expansion of manufacturing capacity, enhancement of the local component system, affordability of products, the PLI scheme and the rise of digital payment platforms, it appears to be a golden period for the industry. "The industry has arrived, marked by a penetration level of 8 per cent. We expect the market to grow more than double by 2030," he says.

While the residential air conditioning market was largely dominated by China, India is swiftly making its way and aiming for an 8 per cent increase in household penetration. "We are 15 years behind China. By 2040–2050, we aim to overtake China," he shares. 

Thiagarajan also believes that the market for room ACs is at an inflection point and is poised to grow exponentially over the next few years. He expects up to 25 per cent growth in sales of residential AC in the June quarter, the period that accounts for the highest number of sales due to the temperature rise and heat wave.

On Expanding Outreach 

The brand will continue to make aggressive strides in ecommerce and modern trade channels and plans to sustain its investments in in-store demonstrators in retail stores, as this has immensely helped in enhancing offtake. Besides, it will adopt appropriate promotional methods both online and offline, amplifying offtake across all tiers. The brand is also strengthening its distribution network, especially in the north. 

Blue Star's presence in modern retail, regional retail chains, ecommerce and distributor networks is one of the major reasons for its success. For Thiagarajan, the marketing mix must be wide and also capture significant mindshare. With a capex of Rs 365 crore, Thiagarajan shares that the brand will invest heavily in ecommerce and modern retail channels in 2024.

On Marketing Plans

Blue Star's longstanding association with Virat Kohli has been bearing fruit and it intends to continue having him endorse its room ACs. Kohli has significantly helped in building brand awareness and equity, Thiagarajan believes. 

With FCB as its creative partner and Kohli as the face, the brand released new films on TV and digital channels in March, essentially to target the youth, the new decision-makers in India. "To be relevant to the new-age consumers, we are playing in large, mid, and small spaces. Hence, Virat was the right fit for us, given he plays in all formats of cricket, just like us," explains Thiagarajan.

Speaking of its ad spend, he emphasises that the brand has moved up from 40 crore to 60 crore for this summer season. 

Overall, the brand will be trading in positive territory in 2024 and will remain unbothered by the elections. In fact, prices will be maintained, running costs will be down significantly and rising heat levels will work in the favour of the industry, compelling consumers to invest in consumer durables.