Star Gazing

Star rating has caught consumer frenzy in every sphere—be it the app-based cab service, mutual fund schemes, insurance policies or the neighbourhood food joint. The belief that a higher rating indicates better product or service is not always true, as ratings are subjective and based on extensive data and experiences shared by people. So, about a decade ago, when the Bureau of Energy Efficiency (BEE) initiated star labelling on manufacturers of electrical goods like air conditioner, refrigerator, geyser, tubular fluorescent tube light among others, the intent was to get consumers to choose products where the power savings was high depending on the star rating of the product.

Since 2008 it is mandatory for product manufacturers of both white and brown goods to have the star ratings mentioned on their products prominently. Says Vijay Babu, Business Head, Residential Air Conditioners - LG Electronics: “For manufacturers star labelling provides an opportunity to differentiate and showcase their product excellence with the help of Star labels.” The move is commendable considering that the ratings reflect the power consumed by these goods. Considering that the cost of running an AC or refrigerator hinges on the power it consumes, it is very useful to know which product consumes more power, which in turn indicates its operational cost.

Gaining popularity

To spread the awareness of ratings, the BEE on its part has been relentlessly running a campaign through a hugely popular radio show – ‘Bachat ke sitare, dost hamare’ The entire radio show is based on a conversation on the need to save electricity and the ways to operate gadgets that will consume less power. The intended benefit of these campaigns—to educate consumers on the savings potential and to be conscious of the power savings potential and choice they have at the time of buying any electrical goods.

There is also a Bee Star Label app, which one can download and evaluate the savings potential of different models of several appliances. However, price sensitive Indians, at the time of purchase are yet to realise the real benefits of buying a product with a higher star rating, which has a lower running cost compared to a low priced item, which lands up consuming more electricity, leading to a higher effective cost.

Take for instance a 5 star AC, which saves 0.2 units in an hour compared to an AC with 3 star rating. If this AC operates 8-10 hours a day, which is how long ACs are easily run in summer months, at an assumed Rs 5 per unit of power, a 5 star AC would help you save Rs 300 a month. The costs get compounded in case of a refrigerator which is on through the year, which means a fridge with a higher star rating is any day preferred over one with a lower star rating.

Making a choice

The propagation of higher stars leading to higher savings cannot be clearly demonstrated for every product, which introduces an element of discretion when selecting an appliance or a product with a star ratings. For instance, the BEE app does not clearly throw up data that can explain on the break-up on how the savings is arrived at. Moreover, not all products have a clear 3, 4 and 5-star rating chart which can define the quantum of savings, keeping everything else the same.

Manufactures on their part, do not produce two products with the same specs to have a clear differentiation between two products that are same. For example, a 5 star AC model will make you dole out an extra amount of approximately Rs 10,000 compared to a 3 star AC, but it will not have the same features for a clear comparison.

“The extra cost that a customer needs to pay for energy efficient air conditioners is like an investment for which they will reap benefits later in terms of savings, comfort and peace of mind,” explains Babu.

Going by the sales of goods in shops, the price conscious Indian is not easily swayed by star ratings. They are focused on the cost at the time of purchase, because most products come with same warranty time periods, which means there is no clearly defined cost benefit available to them. Moreover, the lack of a very clearly defined benefit of going with a higher rated product is not used as a sales pitch at stores, leaving it for the consumer to judge what is good or otherwise for them.

The ratings, many feel has actually left consumers in doubt about the very need of such ratings. Further, lack of trained salesmen at stores, especially multi-brand stores, does not create any convincing reason for consumers to go for a higher rated appliance and goods. For now, you would be left to your own judgement to decide on which star rated to go for. Our inference—it makes sense to go for a higher rated refrigerator at home and a higher rated AC in the office, where the operation time is much longer. Everywhere else—your discretion and the price should tilt the buying decision.

Star labelling program

• Bureau of Energy Efficiency (BEE) is a statutory body that has mandated star labelling of electronic appliances like air conditioners, refrigerators, geysers, among many others intended to reduce energy consumption of appliances and thereby, inform consumers of their cost saving potential.
• Appliances are rated on a scale of five, the mechanism being—higher the number of stars, more is the energy conserved.
• Star ratings get revised annually—it would be in your best interest to check the latest rating to ensure that you don’t get misguided.

shipra.singh@outlookindia.com