Regional air conditioner manufacturers benefit from hot weather

For farmers in Malaysia and western China it spells disaster, but for Japanese and Korean makers of air conditioners it promises a bumper year.

Air conditioners were invented to cool peoples' homes but that is no longer the foremost consideration when Asians shop for them.

Ironically though, given the generally hot and sticky climate across much of Asia, a unit's ability to cool is not the most important factor when consumers consider which brand of air conditioner to buy. A report from Frost & Sullivan's Asia-Pacific environmental and building technologies practice, highlights that the key purchase motivator for consumers is 'energy efficiency', followed by 'cooling capacity' and then 'comfortable indoor temperature'.

End-users are better informed today and are considering long-term operating cost alongside their initial investment. As such, the report found that practicalities such as 'reliability', 'indoor noise', 'service' and 'spare parts' all ranked lower. Last of all came 'innovative design', which only 18 per cent of respondents viewed as 'very important.'

But some parts of Asia are throwing up their own unique reasons for purchase. In Malaysia, for example, 2010 could be a replay of 1997, a year that saw El Nino heat and drought, combined with Malaysia's neighbours' slash-and-burn agriculture, generate a cloud of haze that drove Malaysians indoors amid a national state of emergency.

And in Malaysia, haze sells air conditioners as well as or better than tropical heat. "When haze became a social buzzword, advertising switched focus to ionisers and devices that kill bacteria and viruses," says one account head with an ad agency representing a major air conditioner brands.

Such product features dominate BTL communications in Malaysia. Samsung, in a typical example, sponsors university seminars on the health hazards of bioaerosols and airborne infections, while touting its Virus Doctor based on super plasma ion (SPi) technology, all faithfully reported in the Malaysian press in recent months.

According to some analysts, Malaysia also stands out in that energy efficiency is not high on the list of priorities. Regardless of income, nearly everyone has access to cheap electricity.

Ninety-seven percent of households are connected to the grid, a level much higher than that of its Asean neighbours. Malaysia's residential electricity tariffs are a modest US$0.07 per kwh - second only to Indonesia's $0.06 per kwh - and much cheaper than Singapore's $0.14 or Japan's $0.18 per kwh, according to a study by Taiwan's utility Taipower. This might dampen enthusiasm for energy efficiency as a marketing pitch.

The only other thing that Malaysian consumers might care less about is appearance. "Young married couples might be looking for aesthetics, something that matches the home's dÇcor," said M C Lai, head of qualitative TNS-RI, Malaysia. "But for a family with kids, the emphasis is on the practical - how well does it purify the air... those are the concerns."

In terms of brand awareness from a regional perspective, Frost & Sullivan found that the three most preferred brands were LG, Panasonic and Daikin. Of these LG, had the strongest unaided awareness across the region with 19 per cent of respondents naming the South Korean manufacturer as top of mind. Unsurprisingly, LG scored best in its home country, where it was named by 63 per cent of consumers. Panasonic and Daikin were the most recalled brands in Malaysia and Singapore, respectively.

Yet, in terms of brand preference, LG was exceptionally strong in South Korea (99 per cent) and Indonesia (83 per cent) but weak Japan, where it failed to register.

For Panasonic and Daikin, brand preference was more consistent. Panasonic ranked highest at 45 percent in both Malaysia and Australia, while it peaked at 20 per cent in Thailand. Respondents ranked Daikin highest in Singapore similarly, with scores topping out at 30 percent and sinking to 20 per cent.

Analyst comment

Sapan Agarwal, practice head for Asia Pacific at Frost & Sullivan:
"It is interesting that top of mind awareness of air conditioner brands overall is rather low - less than 20 per cent for the top known brand, LG. Consumers' source of information about brands primarily stems from television and general advertisements. Yet, given the low levels of brand awareness, it appears these information sources are not most effective in promoting air conditioner brands.

Air conditioner manufacturers and brands should consider revising their marketing plans to increase their brand presence across all countries they distribute to, and not depend upon headquarter locations to heighten their brand.
Interestingly, consumers consider energy efficiency as the most important feature of an air conditioner. Function features such as cooling capacity and comfortable indoor temperature are considered slightly less important compared to energy efficiency.

Thus, it appears that APAC consumers are 'environmentally-friendly'-minded, and air conditioner manufacturers should consider this as they continue to develop and market their products. Conversely, innovative and modern designs are of minimal importance among consumers. Rather, consumers are more likely concerned with the function of the product.

Even other feature areas such as service appear to be less of a priority, as consumers may consider service (and other secondary features) only when there are flaws/failures with the primary function of their air conditioner."

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This article was originally published in the 20 May 2010 issue of Media.