How Orient Group’s effective marketing strategy changed the dynamics of AC Industry in Pakistan

Orient Enterprises is a private limited company and the sole distributor of the world’s most renowned brands like Mitsubishi in Pakistan. Last year, the company started selling DC Inverter Air Conditioners, a cost-effective and modern technology, in Pakistan. Since then they have managed to change the whole demographic of the air conditioners market in Pakistan. By starting the trend of DC Inverter ACs, they forced their competitors into a frenzied state as they were caught off guard.

A little background about Orient

Orient Enterprises was established in Lahore in 1957 as a small photography business by the son of a tea vendor, Mian Muhammad Fazal. Today the Orient is one of the largest consumer goods companies of Pakistan.

Theirs is a true “From rags to riches” kind of story.

In 2005, the company took the step to establish its very own manufacturing facility in partnership with Mitsubishi. This decision came in the face of heavy duties and taxes imposed by the government. Over the last decade, they have climbed hurdle after hurdle and have become a big player in the Pakistani electronics industry.

What is a DC Inverter AC?

This year, the company decided to introduce DC inverter ACs in Pakistan. Basically, a DC (Direct Current) inverter is used to convert AC (Alternate Current) to DC (Direct Current) which, in turn, is used to control the speed of the compressor motor of an air conditioner.

Normal non-inverter-using air conditioners can’t control the speed of their compressors and can only run at full 100 percent capacity. In order to maintain the desired temperature, they have to use an on-and-off system which is not exactly ideal for effective power consumption. The new DC Inverter ACs, as a result, are much more power efficient because they don’t have to switch off their compressor. They can just reduce the amount of electricity consumption and adjust the speed of the compressor.

Some manufacturers claim up to 60 to 75 percent savings in electricity costs by using a DC Inverter AC, compared to a non-inverter one.

Although some claims might be over-exaggerated, Inverter ACs do promise considerable cost-savings nonetheless. There might not be a big difference in costs if both the ACs – an inverter and a non-inverter one – are running at full capacity, but most people in Pakistan don’t run ACs at their full capacity. Fair to say, you can safely assume around 60 percent cost-savings in electricity bill when buying a DC Inverter AC.

Older non-inverter-using Air Conditioners are already being rendered obsolete abroad but most of Pakistan wasn’t even aware of this new technology, until January of this year.

Orient Launches DC Inverter ACs Campaign

On the 27th of January, Orient launched a campaign to promote their DC Inverter ACs while simultaneously slashing off their prices. Their 1.5 ton Prime Series AC was slashed down to Rs.57,999, a big discount from the Rs.89,999 it previously cost.

It also touted huge cost-savings, promising to settle the difference of cost in a DC inverter and a normal AC in just one year!

According to Orient,
“Orient DC Inverter’s revolutionary 60% energy saving amazingly saves up to Rs. 5,000 in a month. This leads to savings of up to Rs. 60,000, which is greater than the price of Orient DC Inverter 1.5 ton air conditioner.”

Orient strategically chooses a date near Chinese New Year

The date the company chose to launch this campaign, 27th January, holds a certain strategic importance, which went on to play a huge factor in Orient’s dominance in the AC market of Pakistan. Every air conditioner manufacturer and importer in Pakistan uses components that are imported from China, including Orient itself. The Chinese new year fell on the 8th of February this year and a couple of weeks before this ceremonial day, the manufacturing plants of China stop accepting any orders. Even after this day, the production remains halted for another few weeks.

Orient played a big gamble. Anticipating a giant demand of Inverter ACs in the Pakistani market, it assembled loads of them in advance – all thanks to components imported from China which it managed to get before the Chinese New Year. After that, it put all its efforts into creating a huge hype around DC inverter ACs through a well-organized campaign, taking its competitors by surprise as they were left waiting for the Chinese manufacturing plants to start up again.

The promotion lasted a whole month, pulling an unprecedented amount of sales. Before the launch of the campaign, the market research expected the DC inverter market to expand to at most 30% for the year 2016. But barely three months later, Orient had managed to expand it to 80%. With their effective strategy, Orient broke off all of the previous sales records and changed the industry dynamics over night!

After exceeding sales expectations for four months in a row, Orient has hit its one-year sales target for 2016 in April!

Seeing the immense success of their 1.5-ton DC Inverter ACs, they also dropped the price of the 1-ton version to Rs.48,999, down from Rs.62,999.

Lack of Competition

Other competitors like GREE and Haier, which had initially invested in traditional ACs, were left in the dust by this sudden change of market. As the market for non-inverter ACs started to shrink, some (like GREE) resorted for campaigns against these inverter ACs while others (like Haier) decided to go the conventional way by launching their own brand of inverters. With an ample amount of time to meet buyer demands, Orient kept capturing more of the market, eventually pushing GREE into indirectly attacking other DC Inverter ACs, specifically Orient’s, through an ad with a tagline “Sasta Inverter AC Aap ko Mengha perh Sakta Hai.”

Orient replied with a full comparison of its own DC Inverter ACs with Inverter ACs from other “Greedy” companies. In a one and a half minute video, it goes on to show how their indoor units are not only much bigger in size but also has much higher rated capacity at 4979 Watt (16.3% higher). Their evaporator fans are also bigger in size, leading to more air throw.

Conclusion

Half a year onwards, Orient is one of the biggest suppliers of inverter ACs in Pakistan. A combination of brilliant strategy, effective marketing and an accurate reading of the market-trends has lead Orient to arrive at this stage. Startups and companies alike can take heed from this.

It’s not just having the best product or the most hard working people that will make you successful; a well thought-out strategy and effective marketing play an equally important role in determining a company’s success.