NEW DELHI — In order to pass on the advantages of declining input costs over the festive season, manufacturers may reduce the premium customers have been paying on all of the household equipment, including air conditioners, refrigerators, microwaves, and washing machines, sooner than anticipated.
After reaching all-time highs, the price of copper, steel, and aluminium, the three main raw materials in this industry, has fallen during the past three months. As the cost of obtaining raw materials decreases, this adjustment will directly help producers of white goods, including, but not limited to, Bajaj Electricals, Bluestar, Crompton, Havells, Voltas, and Whirlpool.
White goods, which are categorised as luxuries, include LED televisions, air conditioners, refrigerators, washing machines, dishwashers, and microwaves among others.
Key raw materials have become cheaper
According to recent research by ICICI Securities, copper is 21% cheaper, steel is 19% cheaper, and aluminium is 36% cheaper than it was in April of this year. This will boost margins for these businesses together with the fact that consumers have been paying over 20% more for these household durables since the COVID-19 outbreak began two years ago.
According to ICICI Securities, the higher profit margins would encourage producers of air conditioners, refrigerators, microwaves, and washing machines to expand their advertising spending and provide customers with better discounts. With the festive season only a few months away and these advancements occurring in the second part of the year, the customer’s position becomes stronger.
However, the white goods and durables sector has a bigger inventory. Before offering newer products made with less expensive raw materials, the companies could desire to get rid of their old stock.
Companies expected to increase advertising and offers
As ad expenditures have been on the lower side for the previous three years, so one of the areas in which the businesses are expected to invest is advertising.
Second, they’re probably going to invest more in research and development and introduce a number of new items. Additionally, the businesses will expand their trade promotions and discounts. In order to take market share away from smaller or unorganised businesses, they may also boost the volume of customer offers, the research said.
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