The Big Bang Revival of Voltas: Lessons for Future Entrepreneurs.
Voltas is one of the most amazing brands in the Indian business ecosystem. Its stock price has shot up by 14,200% from just over 6.93 rupees in 2000 to 900 rupees in 2023. A mere 10,000 rupees invested in Voltas in 2000 would be worth 14 lakh rupees today. While most of us know Voltas as a Tata-backed market leader in air conditioners, very few of us know that there was a time when Voltas was almost on the verge of being shut down. They went from being a market leader with a 40% market share in 1990 to just a 6% market share in 2001. But suddenly, something crazy happened, and the same Voltas brand went on to become a market leader in the next 10 years and even today stands as a market leader for 10 consecutive years. So, the question is, how did this failing brand go on to become a market leader? What was the business strategy, and what are the lessons that we need to learn from the iconic revival of Voltas?
WHY WAS VOLTAS IN TROUBLE?
The story of Voltas dates back to 1990 India, during which time Voltas had been a market leader for 38 years and had a market share of 40%. In 1991, the Indian economy opened up, and giant foreign players like LG, Samsung, and Whirlpool entered the market. Suddenly, Voltas' market share started dropping, and the same Voltas brand that was once a market leader had only a 6% market share, and it could hardly stand strong against foreign competitors. This is when the Tatas realized that something needed to be done about the Voltas brand, and they even gave out an ultimatum that the company might be shut down if they did not deliver.
However, in the next 10 years, something crazy happened, and of which Voltas went on to become a market leader by 2012, beating every single brand in its category. They call this strategy the Big Bang strategy.
WHAT IS THE BIG BANG STRATEGY OF MARKETING?
For a product to become legendary, there are two pillars of value that need to be delivered to the customers: tangible value and perceived value. For a product like air conditioners, there's a third pillar, which is after-sales support. The product of these three pillars is what defines the value of a product in the market, and if any one of these pillars drops, the value of the product will drop.
In simple words, if you sit in the best restaurant in the world, the perceived value of the experience is going to be exemplary. So, the music, the aroma, the lighting, all of it will enhance your experience of dining. But after inviting you to this wonderful restaurant, if they serve you rotten chicken, would you love it? No, right? So, even though the perceived value of the experience was great, because the tangible value, as in the food, was not great, the experience of dining turns out to be disgusting.
Similarly, if they serve you the best pizza in the world, but if they place a hundred boiled cockroaches near your table, would you like it? No, right? Here, although the tangible value is great, the perception of the food has been ruined to such an extent that now the experience is disgusting.
So, for a product to be great, it needs to have both perceived value and tangible value. In the case of air conditioners, the factors that define tangible value are cooling capacity, energy efficiency, durability, and product features. Perceived value is derived from the overall brand image, design, aesthetics, and customer service. After-sales, support plays a very crucial role.
Now that we have a better understanding of the pillars of value for a product, let's take a closer look at how Voltas implemented the Big Bang strategy to turn around it's failing brand.
The first step in the Big Bang strategy was to improve the tangible value of their product. Voltas realized that in order to compete with the foreign players entering the Indian market, they needed to improve the quality of their air conditioners. They invested heavily in research and development to create air conditioners that were more efficient, durable, and had better cooling capabilities than their competitors. They also introduced a wider range of air conditioner models to cater to different customer needs and budgets.
The second step was to enhance the perceived value of the Voltas brand. To do this, Voltas focused on its branding and marketing efforts. They rebranded their logo, redesigned their packaging, and launched a series of TV commercials that emphasized the superior quality and reliability of their air conditioners. They also partnered with celebrities and sponsored major events to increase their brand visibility and credibility.
The third and final step was to improve their after-sales support. Voltas realized that providing excellent customer service was critical to building customer loyalty and satisfaction. They invested in building a strong network of service centers across the country and trained their service staff to provide prompt and efficient service to customers. They also launched a toll-free customer service hotline that was available 24/7 to address any customer concerns or queries.
EFFECT OF BIG BANG STRATEGY-
The implementation of the Big Bang strategy paid off for Voltas. By improving the tangible and perceived value of their product, and providing excellent after-sales support, Voltas was able to regain market share and become a market leader once again. In fact, by 2012, Voltas had beaten every single brand in the air conditioner category to become the undisputed market leader.
So, what are the lessons that we can learn from the revival of Voltas? Here are a few key takeaways.
LESSONS-
Innovation is key: Voltas realized that in order to compete with foreign players, they needed to innovate and improve the quality of their products. They invested heavily in research and development to create air conditioners that were more efficient and had better cooling capabilities than their competitors.
Branding and marketing matter: Voltas understood the importance of branding and marketing in creating a strong brand identity and increasing brand visibility. They rebranded their logo, redesigned their packaging, and launched a series of TV commercials that emphasized the superior quality and reliability of their air conditioners.
Customer service is critical: Voltas recognized that providing excellent after-sales support was critical to building customer loyalty and satisfaction. They invested in building a strong network of service centers across the country and trained their service staff to provide prompt and efficient service to customers.
Adapt to changing market conditions: Voltas was able to adapt to the changing market conditions brought about by the liberalization of the Indian economy. They recognized the threat posed by foreign players entering the market and implemented a strategy to improve their product and brand.
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Frequent-Asked Questions (F.A.Qs)-
Why was Voltas in trouble?
Voltas faced trouble when foreign players like LG, Samsung, and Whirlpool entered the Indian market in 1991 after the economy opened up. This resulted in a drop in Voltas' market share from 40% to just 6%, making it difficult for them to compete against these new competitors.
What is the Big Bang strategy of marketing?
The Big Bang strategy of marketing is a comprehensive approach that focuses on improving the tangible value and perceived value of a product. It involves enhancing the product's quality, features, and performance (tangible value) while also working on branding, marketing, and customer service (perceived value) to create a positive and desirable image for the brand.
How did Voltas improve the tangible value of their product?
To improve the tangible value of their product, Voltas invested heavily in research and development. They focused on creating air conditioners that were more efficient, durable, and had better cooling capabilities compared to their competitors. They also expanded their product range to cater to different customer needs and budgets.
What steps did Voltas take to enhance the perceived value of their brand?
Voltas took several steps to enhance the perceived value of their brand. They rebranded their logo, redesigned their packaging, and launched a series of TV commercials that emphasized the superior quality and reliability of their air conditioners. They also partnered with celebrities and sponsored major events to increase brand visibility and credibility.
Why was customer service critical to the revival of Voltas?
Voltas recognized that providing excellent customer service was crucial for building customer loyalty and satisfaction. They invested in building a strong network of service centers across the country and trained their service staff to provide prompt and efficient support to customers. They also introduced a toll-free customer service hotline that operated 24/7 to address any concerns or queries. This focus on customer service helped them regain the trust and loyalty of customers, contributing to their revival as a market leader.
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