Sony Gulf's grand plan

Sony Gulf managing director Masaru Tamagawa speaks to ECN about his first two years at the helm of the Japanese consumer electronics giant’s Middle East division

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By  Aaron Greenwood Published  March 7, 2006

|~|Tam200.gif|~|Sony Gulf MD Masaru Tamagawa|~|Sony Gulf managing director Masaru Tamagawa speaks to ECN about his first two years at the helm of the Japanese consumer electronics giant’s Middle East division ECN: You took up the position of managing director of Sony Gulf two years ago this month. How has the company consolidated its position in the region’s consumer electronics sector during this time? Masaru Tamagawa: The past two years have certainly been eventful. While Sony has enjoyed double-digit sales growth across the region, the dynamics of the consumer electronics sector have shifted considerably. We face unprecedented competition from new players entering the market, which is an indication of the growing importance and potential of this region to international consumer electronics vendors. Product innovation leads the consumer electronics sector. Over the past two years we have launched a range of products and our investment in terms of marketing and nurturing our dealer network has grown manifold. In addition to the greater Middle East region, we are continually fine-tuning our expansion strategies for specific markets such as Iran and North Africa. ECN: At the time of your appointment, you implemented a new strategy for accelerating growth based on three facets: localised communication, focus on competition and the development of a new range of digital products. How successful has this strategy been? MT: Our marketing team has effectively implemented advertising and communications strategies that focus on local consumer demands, which has enhanced our brand image considerably in the Middle East. We strongly believe that consumers in the region have positively received these messages. Recent audits reveal that Sony brand awareness across the Middle East is at its highest point ever. Focusing on competition in the marketplace has also stood us in good stead, even as traditional categories such as CRT televisions and video camcorders have undergone a certain degree of commoditisation. However, even in these highly competitive regional market segments, we have experienced steady growth over the past two years. During this period we have also launched a range of digital products such as flat panel LCD TVs, DVD camcorders, digital still cameras, digital audio devices and laptop computers. These products have proven very popular with local consumers. For example, we launched our Bravia range of flat panel LCD TVs three months ago in the UAE and we have already gained more than 40% market share of the country’s flat panel TV retail sector. ECN: One of your stated goals at the time of your appointment was to strengthen Sony’s distribution channels across the Middle East. How did you set about doing this and has the strategy been successful thus far? MT: Distribution channels are where the battle is won in terms of achieving market share. Given our long-term history in the region, our strength lies in nurturing our established distribution network within the countries of the GCC and Levant. We maintain a comprehensive partner programme in these territories. We continue to invest in this distribution network in an effort to further empower our channel partners. We provide them with a variety of options for increasing their revenues and market share through broader and more competitive products and promotions. ECN: Do opportunities exist to expand your distribution channels in the GCC? MT: Not specifically. We are very happy with our existing distribution network in the GCC. ECN: What strategies do you have in place for dealing with the demands of individual markets in the Middle East? MT: In general our strategy for the region is based on providing the latest technology, the newest products and the highest quality customer service. However, taking into consideration the unique challenges presented by individual markets in the region, we place extreme emphasis on customising product strategies to suit each country in conjunction with our channel partners. ECN: You suggested in 2004 that Sony Gulf would exceed sales of US$1 billion in the Middle East “within a couple of years”. How close is the company to attaining this goal? MT: Sony has four business divisions in the Middle East, namely Sony Gulf, Sony Broadcast & Professional, Sony Ericsson and PlayStation. In FY2004 on a consolidated basis, for all business components, we exceeded US$1 billion in sales. The company’s growth has been such that Sony Gulf alone will exceed US$1 billion in sales turnover this year. ECN: What are the major ongoing challenges facing Sony Gulf in the Middle East? MT:We are continually adding to our range of HD-ready consumer products. A major challenge lies in educating consumers about the inherent qualities of HD prior to the introduction of HDTV broadcasting in the Middle East. HD is a brilliant technology that will literally change the way people view television. ||**||Major competitors|~|Ta200.gif|~||~|ECN: Who are Sony Gulf’s major competitors in the region? MT: Sony Gulf has various competitors in different product segments. In the flat-panel TV and digital video camera categories Panasonic is our biggest competitor. In the digital still camera and laptop computer categories, I would say our major rivals are Canon and Toshiba respectively. In the digital audio devices sector, Apple is a formidable opponent. ECN: You have been based in the Middle East since 2000. How have the various Middle Eastern consumer electronics markets evolved during this time? MT: The Middle East consumer electronics market is constantly evolving and in the past six years it has done so dramatically. For instance the shift in focus from traditional CRT to flat panel televisions has revitalised the TV retail segment. Digital technologies have transformed the video camcorder and portable audio player market. Moreover, we expect that the introduction of HDTV and the expansion of broadband services in the region will further accelerate market growth and demand for new consumer electronics products. ECN: Which country would you consider has the most potential for growth in terms of sales in the Middle East? MT: The UAE leads the way in terms of consumer electronics retail sales in the region. If you were to draw a trend chart for the key consumer electronics categories, the UAE is the favorite testing ground for consumer electronics vendors in terms of new product launches destined for the entire region. ECN: Which country poses the greatest challenges from a business perspective? MT: Iran is a huge market and has great potential, but at the same time, the country’s business and organisational infrastructure remains largely undeveloped. If we can establish an advanced operational set-up in Iran then this could prove a major market for us. We are currently finalising our distribution channel in Iran. ECN: What product lines and technologies do you consider have the most potential to captivate Middle Eastern consumers? MT: As previously mentioned, we have a range of HD -ready products that will fuel our growth in the Middle East, from LCD TVs to HD video camcorders. Other product lines that will contribute to this growth include our Walkman range of portable audio devices, the Cybershot range of digital still cameras and VAIO laptop computers. ECN: How does the Middle East rate in terms of importance to Sony’s consumer electronics operations compared to other world markets? Will it one day rank with Europe and North America in terms of strategic importance to consumer electronics manufacturers? MT: While our sales volumes in the Middle East are smaller than the US and Europe, our investment in the region is quite substantial given its growth potential and the high consumer confidence in the brand. We believe there is tremendous growth potential for new technologies and digitised products, thanks to the anticipated introduction of HDTV services in the region, specifically in the highly developed GCC countries. On the other hand, Iran is an emerging market that holds great potential in terms of consumer electronics sales. Similarly, customer confidence in the Sony brand means that we have to make significantly less effort in regards to consumer education campaigns. Our focus is to meet consumer expectations by providing them with the latest technologies and the most captivating product range available. ||**||

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