THE BUSINESS OF COOL

Issue : April / May 2018 Marketing Mind
 

 

There are a few electrical appliances without which our lives might seem unbearable. While smartphones and coffee machines might top the list for many of us, no one would argue that the air conditioner is not a crucial piece of survival gear in Bangkok, especially in the excruciating heat of summer.

On this issue we had the pleasure of sitting down and chatting with Hitoshi Tanaka, president of Siam Daikin Sales Co Ltd, manufacturer and distributor of the world’s No 1 air conditioner brand, Daikin, that arrived in Thailand five decades ago.

“The air conditioner has been in Thailand for a long time,” Mr Tanaka said. “It was in 1968 that Daikin was first imported to Thailand, and by 1982, the manufacturing factory was set up here to be the production base for the country. It has been 50 full years that Daikin has developed products and air conditioning systems for Thai consumers.”

The soft-spoken, smiling executive has been in Thailand since 2016. After earning a degree in economics, he started his career at Daikin Japan as an engineer 27 years ago. The role led him to be at the helm of Daikin’s new business expansion in the US, then India, where he also oversaw the markets in Nepal and Sri Lanka.

“America is in fact the inventor of air conditioners,” Tanaka explained. “Penetrating the US market was very hard, even though the market was fully developed, because their existing system was the duct type while ours was the wall type (VRV or variable refrigerant volume system), which was ductless. It required a different strategy and years later we managed to become the No 1 brand in the US.”

In Thailand, Daikin is also the top brand, with the biggest market share at 23% and penetration rate at 70% in Bangkok. “The Bangkok market is considered developed, unlike upcountry Thailand, where the penetration rate is 20%. We see this as an advantage, though, as there is more room for us to grow in Thailand,” the executive said.

Before the firm became known as Daikin, he said, it was called Osaka Kinzoku when established in 1953. The Osaka-based firm manufactured metal products and later developed air conditioners for Japanese submarines during World War II. Osaka Kinzoku changed its name to Daikin Industries in 1982.

“That is the main reason why Daikin focuses mainly on air conditioners. We don’t produce anything else. We’re a company that has been involved with air conditioners since the very beginning and have accumulated air conditioning expertise and know-how since then. The air conditioner is our core product and we believe that our innovation and technology is second to none. That’s why we want to focus on air conditioners and be the No 1 brand, with unique specialization in air conditioning technology.”

 

Siam Daikin Siam Daikin

 

Being the first in the game does not necessarily make you the best, but innovation, striving and understanding of consumers’ needs do. Daikin is the innovation leader in the field and has revolutionized the industry several times. One example, according to the president, is that Daikin was the first brand to use the R32 refrigerant in household air conditioners in Thailand in 2014. This was further developed to be used around the globe. R32 is a refrigerant 60% more efficient than its predecessors and three times less harmful in terms of global warming. Combined with Daikin’s inverter technology, R32 helps make air conditioners more energy efficient, generating the highest seasonal energy efficiency ratio.

Hardware aside, helping Daikin to the top of the field is the customer experience. “A good product also requires good technical support and service, especially air conditioners,” Mr Tanaka said. “They are not the kind of product that you plug in and start using. They require the proper wiring and installation process for them to work. We want our customers to be satisfied with both the product and the installation. When they see bad wiring or messy pipes, it reflects badly on the brand and not the technician. Daikin pays attention to all the details to make sure that the customers are getting the best of everything.

“Our training for technicians serves various purposes, but the most important reason behind it is to develop knowledgeable and skilled technicians to provide the best service, quality and safety. Daikin initiated the Chang Air DD programme, in collaboration with the Department of Skill Development, to provide air conditioner technicians with better career opportunities by giving theory and practical training at no cost. We’re entering the third phase now with more than 800 technicians participating so far.” Looking ahead, Daikin has a few plans up its sleeve. One is to consolidate its position as the No 1 brand in the world.

“Currently, our total sales value in Thailand is 9 billion baht. Our goal is to increase that to 15 billion baht. You could say that’s a pretty aggressive target. We are currently the best selling air conditioner brand with the most market share in the world. But the gap between us and the second player is small. By 2020, we want to make this gap wider by pushing our brand up and become the absolute No 1 brand in all aspects, from product excellence, sales volume to service and customer satisfaction.

 

Siam Daikin

 

“While numbers are important, we also strive to serve our customers the best we can,” the executive added. “If you come to Daikin looking to buy an air conditioner, we listen to you and your needs, whether you’re looking for an air conditioner that saves energy, saves the budget or one that goes with the design of your space. I can assure you that our way is not trying to sell but to serve”

 

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