A PROJECT REPORT ON “STUDY OF REFRIGERATOR INDUSTRY IN TERMS OF VARIOUS MARKETING TOOLS AND SURVEY OF DEALERS' SATISFACTION”
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In requirement of partial fulfillment of Master of Business Administration (MBA) Submitted on Submitted by
PREFACE
There are always two sides of knowledge, practical as well as theoretical. Practical is the path through which one can reach his destination. But it is essential to have clear ideas to reach that destination and that is what theoretical knowledge means. In short, theoretical is the instruments which push back the practical one.
Experience makes man perfect. By facing practical situation, one can get new ideas. Theoretical studies are something, which came by practically. Management student can make use of whatever he or she gets from his or her Academic background. Since, the commencement of business and services importance hiked up day by day.
Generally, life makes us to learn something new every time and by this Project study, I get a chance to learn a lot. Basically, it makes us aware about the real life situation. This project contains detailed study about the marketing strategy of SBI vis-à-vis ICICI Bank. What are the strength and weakness of both of these banks.
I have tried my best to get the necessary information for project which includes secondary as well as primary data.
ACKOWLEDGEMENT This report has been submitting in partial fulfillment of the requirement of the award of M.B.A. from _____________________________________
It is a universal fact that for study of a project in depth, I need the support of many people right from the stage of conceiving the idea to completion of report. It is difficult for a single person to do the job efficiently without interaction & involvement of others.
I
take
this
opportunity
to
thank
________________________my
guides,
_______________________ for giving me Valuable Guidance and providing facilities to successfully complete my Grand Project.
I am grateful to other faculty members of ___________for their support whenever required. Discussions with friends also have served to provide sought after information. I am thankful to all our batch mates.
Finally I am thankful to my parents and Lord Almighty without whose blessings tasks are incomplete.
TABLE OF CONTENT
EXECUTIVE SUMMARY The Indian consumer durables industry has witnessed a considerable change in the past couple of years. Changing lifestyle, higher disposable income coupled with greater affordability and a surge in advertising has been instrumental in bringing about a sea change in the consumer behaviour pattern. This industry consists of durable goods used for domestic purposes such as televisions, washing machines, refrigerators, microwave ovens, mobile phones etc. The growth in the consumer durables sector has been driven primarily by factors such as the boom in the real estate & housing industry, higher disposable income, emergence of the retail industry in a big way coupled with rising affluence levels of a considerable section of the population. As per a survey conducted by FICCI on the Indian consumer durables industry, a shift in consumer preferences towards higher-end, technologically advanced branded products has been quite discernable. This shift can be explained by narrowing differentials between the prices of branded and unbranded products added with the high quality of after sales service provided by the branded players. The shift has also been triggered by the availability of foreign branded products in India owing to lower import duties coupled with other liberal measures as introduced by the government.
Industry Classification The consumer durables industry can be broadly classified as consumer electronics and consumer appliances. The consumer appliances category can be further segmented as white goods and brown goods.
Current marketing environment of Consumer Durables. Industry size, growth and trends India’s consumer market is riding the crest of the country’s economic boom. Driven by a young population with access to disposable incomes and easy finance options, the consumer market has been throwing up staggering figures. India officially classifies its population in five groups, based on annual household income. These groups are:
Lower Income;
three subgroups of Middle Income; and
Higher Income.
However, the rupee income classifications by themselves do not present a realistic picture of market potential for a foreign business enterprise, because of significant differences in purchase power parities of various currencies. In fact, the Indian rupee has a very high purchase power parity compared to its international exchange value. For instance, while the exchange rate of one US dollar is 48.50i Rupees, the domestic purchasing power of a US dollar in the US is closer to the purchasing power of Rs 6 in India, for equivalent needs and services. As a result, India ranks fifth in the world, on purchase power parity terms, despite being having low per capita national income (US$ 340 per capita).
Consumer Classes Even discounting the purchase power parity factor, income classifications do not serve as an effective indicator of ownership and consumption trends in the economy. Accordingly, the National Council for Applied Economic Research (NCAER), India’s premier economic research
institution, has released an alternative classification system based on consumption indicators, which is more relevant for ascertaining consumption patterns of various classes of goods. There are five classes of consumer households, ranging from the destitute to the highly affluent, which differs considerably in their consumption behaviour and ownership patterns across various categories of goods. These classes exist in urban as well as rural households both, and consumption trends may differ significantly between similar income households in urban and rural areas.
Overview of India’s Consumer Durables Market The Indian consumer durables segment can be segregated into consumer electronics (TVs, VCD players and audio systems etc.) and consumer appliances (also known as white goods) like refrigerators, washing machines, air conditioners (A/Cs), microwave ovens, vacuum cleaners and dishwashers. Most of the segments in this sector are characterized by intense competition, emergence of new companies (especially MNCs) and introduction of state-of-the-art models, price discounts and exchange schemes. MNCs continue to dominate the Indian consumer durable segment, which is apparent from the fact that these companies command more than 65 per cent market share in the colour television (CTV) segment. In consonance with the global trend, over the years, demand for consumer durables has increased with rising income levels, double-income families, changing lifestyles, availability of credit, increasing consumer awareness and introduction of new models. Products like air conditioners are no longer perceived as luxury products.
Growth of Consumer Electronics Production in India
Overall the percentage increase during the past 7 years is shown above. It can be seen that the growth of durable industry has been on the upper side during this years.
During FY09, volume share of the single largest consumer durable was colour TVs at 30%, followed by refrigerators and air conditioners at 18% and 13% respectively. Washing machines and other assorted consumer durables captured a share in the total volume by 5% and 34% respectively.
About Refrigerator A refrigerator (often called a "fridge" for short) is a cooling appliance comprising a thermally insulated compartment and a mechanism to transfer heat from it to the external environment, cooling the contents to a temperature below ambient. Refrigerators are extensively used to store foods which deteriorate at ambient temperatures; spoilage from bacterial growth and other processes is much slower at low temperatures. A device described as a "refrigerator" maintains a temperature a few degrees above the freezing point of water; a similar device which maintains a temperature below the freezing point of water is called a "freezer". The first known artificial refrigeration was demonstrated by William Cullen at the University of Glasgow in 1748. Refrigerators are of two types: 1. Direct cool Refrigerator: Cooling comes from the compressor only, need to defrost the ice when the frost created inside the freezer. 2. Frost free Refrigerator : A combined fridge/freezer which applies the frost free system to the freezer compartment only is usually called "partial frost free", while one which also applies it to the fridge compartment is called "total frost free". The latter features an air connection between the two compartments, with the air passage to the fridge compartment regulated by a dumper. In such a way, a controlled minor part of the dry and fresh air coming from the dynamic cooling element located within the freezer can reach the refrigerator.
Refrigerator: Demand and supply side dynamics According to CMIE statistics, domestic consumption of refrigerators witnessed a decline between FY06 and FY09, while exports grew. From 3% of the total consumption in FY05, exports grew to7% of the total consumption in FY09. On the supply side, domestic production of refrigerators in the total supply remained at the same levels in the past three years ended FY09. At 99% each in FY06-09, the share of production reported a mere 100 basis point increase over FY06, as imports slided. The refrigerator industry posted a sluggish performance since the beginning of FY09 on the back of volatile steel prices. The first quarter saw a production growth of a mere 50 basis points to 2.18 million units, as per CMIE.
Industrial Growth The industrial sector grew in moderation during FY09 at 8.5% on the back of a comparatively higher growth of 11.5% during the previous fiscal. The country’s real GDP grew by 9.6% during FY09. The consumer durables segment witnessed a fall in production particularly for items where consumer preferences have shifted towards newer products. Shifting in the consumption pattern coupled with rising input costs of steel, iron ore etc, may further affect the production levels of these goods. On the supply side newer variants of consumer durables on the back of technological advancements have flooded the market, whereas on the demand side it is the prospering middle class and consumerism which have led to changing demand patterns.
Foreign Direct Investment The net Foreign Direct Investment (FDI) inflows to India increased from US $ 22 bn in FY07 to US $ 32.3 bn in the following fiscal. During 2007 and 2008, the share of FDI in the electronic goods segment remained flat at 0.2%, coming on the back of a 1.5% share in CY06.
SLEPT ANALYSIS Foreign investment up to 100 per cent is possible in the Indian consumer electronics industry to set up units exclusively for exports. It is now possible to import duty-free all components and raw materials, manufacture products and export it. EHTP (Electronic Hardware Technology Park) is an initiative to provide benefits to companies that are replacing certain imports with local manufacturing. EHTP benefits include export credits, no duties on imported components or capital equipment, business tax incentives, and an expedited import-export process. The government, in an attempt to encourage manufacture of electronics in India has changed the tariff structure significantly. Customs duty on Information Technology Agreement (ITA-1) items (217 items) has been abolished from March 2005. All goods required in the manufacture of ITA-1 items are exempt
from customs duty. Customs duty on specified raw materials / inputs used for manufacture of electronic components or optical fibres / cables has been removed. Customs duty on specified capital goods used for manufacture of electronic goods has been abolished.
Growth Scenario Rising disposable income and declining prices of durables have resulted in increased volumes.An increase in disposable income is aided by an increase in the number of both doubleincome and nuclear families.The market for consumer durables (including entertainment electronics, communitarian and IT products) is estimated at Rs 32 billion (US $7.1 billion). The market is expected to grow at 10 to 12 per cent annually and is expected to reach Rs 60 billion (US$13.3 billion) by end of 2010. The urban consumer durables market is growing at an annual rate of seven to 10 per cent, the rural durables market is growing at 25 per cent annually. Some high-growth categories within this segment include mobile phones, TVs and music systems.
Consumer durables are expected to grow at 10-15 per cent in 2010-11, driven by the growth inrefrigerators and air conditioners. Value growth of durables is expected to be higher than historical levels as price declines for most of the products are not expected to be very significant. Though price declines will continue, it will cease to be the primary demand driver. Instead the continuing strength of income demographics will support volume growth.
The key growth drivers for the Indian consumer durables industry: Rise in disposable income: The demand for consumer electronics has been rising with the increase in disposable income coupled with more and more consumers falling underthe double income families. The growing Indian middle class is an attraction for companies who are out there to woo them. Availability of newer variants of a product: Consumers are spoilt for choice when it comes to choosing products. Newer variants of a product will help a company in getting the attention of consumers who look for innovation in products. Product pricing: The consumer durables industry is highly price sensitive, making price the determining factor in increasing volumes, at least for lower range consumers. For middle and upper range consumers, it is the brand name, technology and product features that are important. Availability of financing schemes: Availability of credit and the structure of the loan determine the affordability of the product. Sale of a particular product is determined by the cost of credit as much as the flexibility of the scheme. Rise in the share of organised retail: Rise in organised retail will set the growth pace of the Indian consumer durables industry. According to a working paper released by the Indian Council for Research on International Economic Relations (ICRIER), organised retail which constituted a mere four percent of the retail sector in FY07 is likely to grow at 45-50% per annum and quadruple its share in the total retail pie 16% by 2011-2012. The share will grow with bigger players entering the market. Innovative advertising and brand promotion: Sales promotion measures such as discounts, free gifts and exchange offers help a company in distinguishing itself from others.
Festive season sales: Demand for colour TVs usually pick up during the festive seasons. As a result most companies come out with offers during this period to cash in on the festive mood. This period will continue to be the growth driver for consumer durable companies.
Major hurdles and challenges plaguing the Indian consumer durables sector: Threat from new entrants, especially global companies: The domestic consumer durables sector faces threat from newer companies, especially from global ones who have technologically advanced products to offer. Rivalry and competition: Presence of a large number of players in the domestic consumer durables industry leads to competition and rivalry among companies. Threat from rivalry and competition poses a threat to domestic companies. Potential markets remaining yet untapped: A large segment of the domestic market, mostly the rural market is yet to be tapped. Tapping this yet untapped and unorganised market is a major challenge for the Indian consumer durables sector. Threat from substitute products/services: The domestic consumer durables industry is plagued by threats from substitute products. Easy accessibility to theatres/multiplexes, especially in urban areas has turned off the viewership from TV to a large extent. With the advent of a horde of FM radio stations, radio sets have now substituted TVs. Customer power with respect to availability of choice: The availability of a wide product line on account of most products being homogeneous, poses a threat for companies operating in the consumer durables sector. Customers have the choice of both domestically produced and imported goods, with similar features.
OBJECTIVE OF THE STUDY:
The study is conducted with the following objectives : To understand the Refrigerator industry trends in demand, production and sales in the past years. To study the structure of the market in terms of market share of different types of Refrigerator, major players, penetration levels and share of different regions. To study the major players in the industry with their product mix, financial performance, marketing strategies and highlight their future plans. To examine the existing distribution channels used by the industry players. To understand the major trade practices of the industry regarding the trade margins, trade discounts, credit and payment terms through a detailed survey. To understand the warranty procedure and the service network of the industry players. To ascertain the satisfaction level of the channel members with the current practices and to recognize the gaps, if any.
RESEARCH METHODOLOGY:
The Study will be conducted in two phases:
Secondary Research:
This stage involves the collection of secondary data on the refrigerator industry, the major players and past & future market trends through Published Reports, Magazines, and the Annual reports of the companies.
Primary Research: This stage involves the collection of primary data. The research will be carried in Dharwar. The study will be conducted for the Dealers who are in Dharwar city.
DATA COLLECTION METHOD:
This will be done in the following manner,
In depth Interviews of the Dealers of the Refrigerator regarding their stocking patterns, sales seasonality, operating prices, trade margins, trade practices of different companies, tastes and preferences of the customers and the other practices adopted by them.
Approach
The questionnaire will be used to conduct the study for the Refrigerator Dealers. The Research will be conducted for dealers, as they are the people who are engaged in the selling of the product. Hence, the idea about the factors, which plays an important role during the selling process, can be known.
SAMPLE METHOD:
Sample Sample Size
::-
Dharwar
50 Refrigerator Dealers.
Sample Method
:-
Random Sampling.
Sample Coverage :-
Dealers.
Comparative product models mapping
From the direct cool Refrigerator capacity mapping and comparative model mapping it can be easily understood that just because to give wider option to choose from, companies are segregating the already segregated direct cool product category. Most of the Refrigerators which are getting sold in India belong to direct cool refrigerator product category. It /is compulsory for the appliances brands to make strong hold present in this segment to create brand preference in higher product segments. That‟s why Whirlpool is having 36 models (consisting variants also) which represents strong hold in the segment.
Companies are lying strongly in the entry level Refrigerators that‟s why they have flooded the segment with various liters capacity. Companies like Whirlpool having presence in170, 175, 180 liters capacity. This strongly suggests the strategy of Whirlpool to offer the same product for different customers for different usage pattern and need.
Company like LG is also having presence in 4 sub segments, like 175, 180,185,190 liters capacity with different design and variants to choose from, in other way it is focused to the customer who just want a fridge which can cool, and the customer don‟t want to spend much over it, with this LG is also focusing on that customers which is seeking different product attributes for the product, which he/ she want to purchase.
Direct cool segment is the segment where Haier is having presence in 190 and 210 liters, with only 11 models and specifically in entry level it has only 7 models whereas their competitors are having 15 models. Whirlpool is having 25 models in this category where as Godrej is having 15 models.
3 Competition
LG, is currently market leader, who leads market with 34% of market share in India, with wide range of refrigerators & innovative designs & association of their product through taking common models into there advertisements. A brief about LG is as follows. LG Electronics was established on October 1, 1958 (As a private Company) and in 1959, LGE started manufacturing radios, operating 77 subsidiaries around the world with over 72,000 employees worldwide it is one of the major giants in the consumer durable domain worldwide. The company has as many as 27 R & D centres and 5 design centres. Its global leading products include residential air conditioners, DVD players, CDMA handsets, home theatre systems and optical storage systems.
Then there is Samsung who follows LG in Market share with half a share from LG, with only18.1%. Samsung India commenced its operations in India in December 1995, today enjoys a sales turnover of over US$ 1 billion in just a decade of operations in the country. Samsung design centres are located in London, Los Angeles, San Francisco, Tokyo, Shanghai and Romen. Samsung India has its headquartered in New Delhi and has a network of 19 Branch Offices located all over the country. The Samsung manufacturing complex housing manufacturing
facilities for Colour Televisions, Colour Monitors, Refrigerators and Washing Machines is located at Noida, near Delhi. Samsung ‘Made in India’ products like Colour Televisions, Colour Monitors and Refrigerators are being exported to Middle East, CIS and SAARC countries from its Noida manufacturing complex. Samsung India currently employs over 1600 employees, with around 18% of its employees working in Research & Development.
Whirlpool of India Whirlpool was established in 1911 as first commercial manufacturer of motorized washers to the current market position of being world's number one manufacturer and marketer of major home appliances. The parent company is headquartered at Benton Harbor, Michigan, USA with a global presence in over 170 countries and manufacturing operation in 13 countries with 11 major brand names such as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Laden and Ignis. Today, Whirlpool is the most recognized brand in home appliances in India and holds a market share of over 25%. The company owns three state-of-the-art manufacturing facilities at Faridabad, Pondicherry and Pune. In the year ending in March '06, the annual turnover of the company for its Indian enterprise was Rs.1,375 crores. According to IMRB surveys Whirlpool enjoys the status of the single largest refrigerator and second largest washing machine brand in India.
Godrej India Godrej India was established in 1897, the Company was incorporated with limited liability on March 3, 1932, under the Indian Companies Act, 1913. The Company is one of the largest privately-held diversified industrial corporations in India. The combined Sales during the Fiscal Year ended March 31, 2006, amounted to about Rs. 58,000 million (US$ 1,270 million). The
Company has a network of 38 Company-owned Retail Stores, more than 2,200 Wholesale Dealers, and more than 18,000 Retail Outlets. Company has Representative Offices in Sharjah (UAE), Nairobi (Kenya), Colombo (Sri Lanka), Riyadh (Saudi Arabia) and Guangzhou (ChinaPRC).
The Marketing Mix: Ingredients for Success
The marketing mix, earlier known as the 4 P‟s, (but now has a few more), is a vital part of any marketing strategy. This is a tool whereby the marketer takes decisions on what and how a product should be, where it can be sold, how it should be priced, how it will be promoted, how to equip the people who are responsible for selling the product… and so on. Getting the marketing mix right is equally important for the large corporation and the small business owner.
One of the most critical marketing management decisions is that decision of setting the marketing mix values, and selecting and employing strategy that periodically changes that marketing mixes in response to changing business environment. The marketing mix problem involves setting the values of the marketing decision variables; the four P‟s; namely, Product (its quality), Price, Place (distribution and sales-force expenditures) and Promotion (advertising, selling). Developing an effective marketing mix is important for product planners seeking to gain competitive advantage in industrial markets. The decision regarding specifying the marketing mix depends on a set of variables, such as competitor's price, competitor's product quality, competition level, forecasted sales and others. These types of variables necessitate adoption of appropriate approaches that can deal with such variables' nature marketing mix mapping is a step done to achieve this.
Product:A lot of thought and effort goes into designing a product offering. The most important question, as a marketer, a person need to ask is whether there is a need for that type of product and how this product satisfies that need better than those of their competitors. This will force to think of why that product is unique, and thereby help to evolve that product‟s Unique Selling Proposition.
Price: This element of the marketing mix can be many a strategy‟s undoing. A complete understanding of the financials that drive a business is essential before deciding a pricing strategy. Base your decision after considering the following – what is the perceived value of your product in the eyes of the customer? How price elastic is the market? Do you wish to load overheads on to the new product, if an existing product line is capable of absorbing them? What is your objective – do you plan to gain market share on the strength of a rock bottom price or do you wish to create a premium image targeted at niche customers and price your product accordingly?
Place: This is probably that element of the marketing mix that has undergone a complete change in definition. Traditional trading and distribution models have given way to remote or virtual channels. While reaching the customer may have become simpler, your job as a decision maker has become that much more complex. You now have a plethora of options to choose from – do you go for brick and mortar or direct mailing, use the phone or sell door to door? This decision should, first and foremost, be driven by customer preference and then by other considerations like logistics and economics. Indeed most businesses rely on a multi distribution channel strategy.
Promotion: In a commoditized industry, this is what makes the essential difference. Possibly no other marketing mix element draws as much attention from strategy makers. Again, let consumer needs drive your efforts. Does your marketing communication address a specific need of the target audience? Is the message memorable? Does it spur action? Here again, the entire landscape has changed from what it was a few years ago. Promotion has gone way beyond mere advertising and public relations – it is now a highly evolved process, ranging from live events to internet marketing. In these times of information overload, promotion strategies must pack sufficient punch to cut through the clutter.
The marketing mix is a dynamic entity and needs to be reviewed and refined periodically. It always helps to stay in touch with the latest developments. Marketing mix mapping for the brand is done to know the standing of the brand mapped with their competitors with respect to essential element of marketing mix i.e., product, price, place, and promotion. It ensures Studying marketing mix strategies of the brand mapped and reviewed and refined periodically according to market condition and competition comparative mapping with other major players in the market, finding loopholes and building effective marketing mix strategy for Haier in Refrigerator and Washing machine segment
Appliances market opportunities: The top 67 cities in India are also the key potential market for appliances companies‟ .According to NCAER, usage pattern of consumer durable in these cities reflect a growing trend for appliances such as refrigerator and washing machines. Ownership of refrigerators, for instance, in these 67 cities is much higher than the national average 492 out of 1000 household in these cities own refrigerators compared to the national average of 134 to 1000 households. Similarly, 316 households per 1000 households in the top 67 cities owned washing machine compared to the national average of just 72 household‟s among every 1000 households.
The housing boom in these cities is increasing the demand for appliances. The increasing number of double - income families also bodes well for the sector. The frost free segment of the refrigerator market is seeing spectacular growth as more urban families are replacing their old refrigerators. Consumers in the south and western regions of India go for high- end models of appliances while the north and east continue to prefer lower-end models and direct cool refrigerators Optimistically we can say that robust appliances sales will continue in 2010, particularly since changes in the electricity scenario is making it power accessible to more Indians in the urban as well as rural areas.
Industry structure and development The growth in the refrigerator category has been marginal in the year under review compared to the segments which have however grown faster than others. For instance in the refrigerator category, the frost free category (27% contribution) has had a double digit growth, while the large DC segment actually decline, leading to an overall growth in the refrigerator of 8%. Given the fact that refrigerator category has shown a reversal of trends, and with washer growth expected to continue, the overall growth is likely to be better in the ensuring financial year.
The Indian market size for refrigerators was estimated at 4.1 million units and the installed manufacturing capacity of these players is above 6.5 million units per annum. Also the washing machines market in India was estimated at 1.45 million units while the installed manufacturing capacity is near 3.75 million units. This clearly indicates much lower capacity utilization for most of the players. The quality of these products manufactured still needs to be enhanced if they are to catch up with the global standards. This could partly be due to highly labor intensive operations with low automation and also because of the prevailing technology gap.
The concept-to-market time for most of the plants in India is still higher than the global norm and except for LG, exports from India haven‟t really picked up as projected. There still seems to be quite a way to go before India becomes one of the global appliance production and export hubs like China.
LG is one of the leading players that offer a full range of appliances to Indian consumers – right from refrigerators to CTV to mobile phones, etc. Other players can also adopt a similar strategy as this will help these companies to increase their influence on the supply chain as more dealers / distributors will be willing to display a full range of products rather than a couple of appliances. This can also help absorb costs for the loss-making products at the expense of profitable ones. Whirlpool is working on improving cost efficiency and is operating a 5 day extended shift in its plants. The company is determined to invest further in India to regain its market leadership.
Promotion Samsung Innovative promotion and advertising initiatives To establish trust and confidence among Indian consumers, Samsung did active promotion and advertising by taking the following initiatives. Samsung India associated itself with the ruling passion of the Indian mass consciousness: Cricket. Samsung launched the Team Samsung campaign with the stars of the Indian cricket team, which caught the imagination of an entire nation. Samsung also brought to India what was possibly the biggest cricketing spectacle of this decade, the historic India vs. Pakistan cricket series - „The Samsung Cup‟. Not confining itself to cricket, Samsung sponsors the Indian contingent to the Olympics and the Asian Games. It also ran training programmes for deserving Indian athletes under the Olympic Ratna banner. Samsung has also helped bring to India, for the first time, the Olympic torch relay. Samsung also brings every year to India - the World Cyber Games, which is regarded as the Olympics of the Cyber world. Samsung also launched a series of innovative below-the-line activities. In mobile phones, Samsung tied up with noted painter Satish Gujral for his paintings to be available as downloads on Samsung mobile phones. Product placement was done in movies and popular television serials like „Jassi‟ where Samsung products were set in lifestyle environments. Samsung branded its products as superior technology and environment friendly ones. The Samsung refrigerators and ACs incorporate a revolutionary new technology called Silver Nano Health System that ensures freshness and bacteria free environment. It
launched the “Bio” range of products. In microwave ovens, features like the bio-ceramic coating and 3D shower waves keep in mind the health conscious public of today. Launched a special marketing campaign for Flat TVs including a focused advertising campaign „Duniya Hai Gol, TV Flat‟ and attractive exchange offers. As a result, flatscreen TVs make up over 50 per cent of Samsung‟s TV sales compared an industry average of 17 per cent.
Customized products for Indian Consumers Samsung understands the local cultural sensibilities to customize its products according to the Indian market. It has set up a “usability lab” at the Indian Institute of Technology in New Delhi to customize Samsung products to meet the specific needs of Indian consumers. This industry-institute partnership is helping Samsung to study and analyze consumer response in aspects of product design, including aesthetics, ergonomics and interface. Through its research done on consumer preferences in India, Samsung has concluded that Indian consumers want more sound oriented products. Thus, the Samsung televisions for India have a higher sound capacity than their foreign counterparts.
Innovative marketing strategies of LG To make itself a known brand in the consumer electronics sector, LG has taken innovative marketing and promotional initiatives: Launch of new technologies in consumer electronics and home appliances. LG was the first brand to enter cricket in a big way, by sponsoring the 1999 World Cup, and followed it up in 2003 as well. LG brought in four captains of the Indian cricket team to endorse its products. LG invested more than USS 8 million on advertising and marketing in this sport. LG has differentiated its products using technology and health benefits. The CTV range has „Golden Eye‟ technology, air-conditioners have the „Health Air System‟ and microwave ovens have the „Health Wave System‟. Local and efficient manufacturing Reduce cost and to overcome high import duties, LG manufactures monitors and
refrigerators in India at its manufacturing facility at Noida, Delhi. LGEIL had already commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs. This has helped LGEI to reduce costs. LGEIL is implementing a “digital manufacturing system”DMS) as a cost-cutting innovation. This system is a follow-up to the Six Sigma exercise LGEIL had initiated earlier.
Product localization Product localisation is a key strategy used by LG. LG came out with Hindi and regional language menus on its TV. Introduced the low-priced “Cineplus” and “Sampoorna” range for the rural markets. LG was the first brand to introduce gaming in CTVs. In continuation of its association with cricket,LG introduced the cricket game in CTVs.
Pricing strategies: If we look upon the pricing strategies adopted by the consumer durable brands we can see that there is not much difference. Every company is trying to give variable product option in variable prices to focus on different pool of customer incomes, and requirements with the same brand. The refrigerator of a company like LG which is a market leader is starting from 7500 in 175 liter capacity in direct cool refrigerator category. They are so much of variable option in same segment to attract different type of customers one of the reasons is that LG business is now is on such heights now due to mass production there landing manufacturing cost is coming comparatively much lesser than their competitors. LG pricing strategy is totally matches with its corporate strategy. First they have created a kind of brand image where they don‟t have to depend upon their dealer and distributors, their products are getting sold itself in the market. They keep on capitalizing in their strategy to push the product before a customer gets enters in the store in order to pull demand from the market.
Samsung is also adopting same kind of pricing strategy but they are different from LG in respect to their price positioning they have got the clue that modern day demand is pulled by the young aspiring middle class, they want lifestyle in their life and prefer life style product and services, Samsung understood that fact and started to position as a lifestyle product brand and their price positioning is accurately based upon it. With this they are so much of variable option in same segment to attract different type of customers.
Samsung starting entry level refrigerator starts from 8200 with a clear differentiation with their competitors in this segment.
Godrej with a launch of new product line also want to create and to give a fresh look in to their brand with vibrant colors and design and in order to come up from old Indian brand image. Godrej pricing is very much competitive in one way they are giving economical models and they are also focusing on high end models with their new launch. Godrej is giving extra profit margin of 1.3% other then what they are giving currently, with a wider focus on brand visibility and promotion.
Whirlpool is having wider option both in refrigerator and washing machine they are also having highest no of refrigerators models. They are also focusing majorly on to give lifestyle feeling and their pricing is based upon it. Haier entered the Indian market with a premium line of products, which prohibited the brand from building a mass appeal. Although, there are so many players in the market and there is enough space for players like Haier seeing the economy grow at around 810%. In the beginning Haier was clear that it will target niche segments. For instance, it had 2.3 kg washing machine, targeted at small washing jobs, priced at Rs 6,990, and a bottom mounted refrigerator priced Rs 42,900, which are not offered by any other brand. Although globally, Haier is a big name in appliances, with this segment contributing 70% to overall turnover, in India it wants a strong showing in CTV‟s also
that‟s why they focused more in electronic segment first because of that they lacked focus in appliances in India.
FINDINGS OF RESEARCH
1.
How many brands of Refrigerator do you keep in your shop ? ( ) Godrej
( ) Haier
( ) Videocon
( ) LG ( ) Voltas
() Samsung
60 48
50
38
40 30 20 10
4
4
5
godrej
haier
videocon
1
0 LG
voltas
Samsung
FINDINGS During the survey it was observed that majority of the distributors are selling major 02 brands that is LG and Samsung. Other brands are not having that much of presence in the market though there were some distributors who were selling brands like Haier, Godrej and voltas.
2.
Rank the below brands in terms of sales turnover and in % ? Turnover (Rank)
%
Godrej
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Haier
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Videocon
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LG
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Voltas
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Samsung
-----------------------
-----------------------
On the basis of turnover (% sales of Refrigerator) 60 48
50
38
40 30 20 10
4
4
5
godrej
haier
videocon
1
0 LG
voltas
Samsung
FINDINGS Majority of the sales turnover is accounted for LG and Samsung. Both the brands are equally doing well in the market. For their it was observed during the survey that companies like LG and Samsung are having various schemes for customers as well as for the distributors which boosts the sales of their companies compared to other companies.
3.
Is there any seasonality in the Demand of Refrigerator ? ( ) yes
( ) No
If, Yes than what is the general peak season, -------------------------------------60 50 50 40 30 20 10 0 0 yes
no
FINDINGS Sales of refrigerator is directly related to the season. During summers, sales of refrigerator is noted at the highest level during the year. Also during this time period there are lot of incentive schemes offered to customers as well as the distributors to boost the sales.
4.
What are the attributes Consumer prefer while buying any Refrigerator ? (Rank them, 1 = Highest) ( ) Price
( ) Brand name
( ) Technology
( ) Durability ( ) Consumer finance
( ) After sales service
( ) Others ----------------
7 6 6 5 5 4 4 3 3 2 2 1 1 0 brand name
technology
consumer finance
after sales service
price
durability
FINDINGS During the survey, it is observed that the first thing that the customer look is for the brand name followed by the type of technology and finance options. It is clear that, to improve the sales, companies should try to Improve the brand image and should invest in the R&D to launch the latest features. However it takes a lot to improve the brand image, but the companies should try in that segment since the purchase of refrigerator is more centric towards the brand name followed by the technology.
5.
What are the Sales Promotional Tools offered to you ? Company (a)
Cash Discount
----------------------
(b)
Free Offers
----------------------
(c)
Long Term Credit
----------------------
(d)
Sales Contests
----------------------
(e)
Others
----------------------
FINDINGS
Almost all the above Promotional tools are offered by Samsung and LG. However companies like haier and Voltas don‟t give Long term credits to the distributors.
6.
Of the above Tools Rank them as below,
(Rank them, 1 = Highest) (a)
Cash Discount
----------------------
(b)
Free Offers
----------------------
(c)
Long Term Credit
----------------------
(d)
Sales Contests
----------------------
(e)
Others
----------------------
4.5
4
4 3.5
3
3 2.5
2
2 1.5
1
1 0.5 0 sales contest
cash discount
free offers
long term credit
FINDINGS Distributors prefer more of sales contest, where in they have some incentives clubbed with the volume of sales that they do, followed by the cash discounts and free offers. However Long term credits are preferred the last one, since they have no incentives. But if short time credits are offered, than companies can improve the sales, but the industry is such that short term credits are not offered because of the huge investments made by companies.
7.
What are the Trade Practices offered by the various companies, (a)
Margin (approx)
------------%
(b)
Replacement
( ) Yes ( ) No
(c)
P.O.P. Material
( ) Yes ( ) No
(d)
Training
( ) Yes ( ) No
(e)
Shop infrastructure
( ) Yes ( ) No
CONCLUSIONS AND SUGGESTIONS
CONCLUSIONS
1 During the survey it was observed that majority of the distributors are selling major 02 brands that is LG and Samsung. Other brands are not having that much of presence in the market though there were some distributors who were selling brands like Haier, Godrej and voltas. 2 Majority of the sales turnover is accounted for LG and Samsung. Both the brands are equally doing well in the market. For their it was observed during the survey that companies like LG and Samsung are having various schemes for customers as well as for the distributors which boosts the sales of their companies compared to other companies. 3 Sales of refrigerator is directly related to the season. During summers, sales of refrigerator is noted at the highest level during the year. Also during this time period there are lot of incentive schemes offered to customers as well as the distributors to boost the sales. 4 During the survey, it is observed that the first thing that the customer look is for the brand name followed by the type of technology and finance options. It is clear that, to improve the sales, companies should try to Improve the brand image and should invest in the R&D to launch the latest features. However it takes a lot to improve the brand
image, but the companies should try in that segment since the purchase of refrigerator is more centric towards the brand name followed by the technology. 5 Almost all the above Promotional tools are offered by Samsung and LG. However companies like haier and Voltas don‟t give Long term credits to the distributors. 6 Distributors prefer more of sales contest, where in they have some incentives clubbed with the volume of sales that they do, followed by the cash discounts and free offers. However Long term credits are preferred the last one, since they have no incentives. But if short time credits are offered, than companies can improve the sales, but the industry is such that short term credits are not offered because of the huge investments made by companies.
SUGGESTIONS
1 Consumer durable goods industry involves huge investment in the productions of goods as well as the R&D dept. Companies which can make this investments are in a position to maintain their position in the market. 2 companies should try to create their brand image in the mind of customers. However this also involves time and money both, but it will have a long term effect in the sales figure. Companies like LG and Samsung have invested lot of money in various events to reach the mind of common people. Brand awareness is the major factor to increase the sales. 3 Distributors are at time overlooked and their needs are not taken care off. Distributors demand short term credit which if provided, companies can really increase the sales. This industry involves lot of investment and if short term credits are made available to the distributors, than their working capital needs can be taken care off and sales can be incresased
CHALLENGES AND OPPORTUNITIES The Challenges of the challenges for the players. At its present structure the total tax incidence in India even now stands at around 25-30 per cent, whereas the corresponding tariffs in other Asian countries are between 7 and 17 per cent. opulation that lives in its villages still remains relevant for some consumer durables companies. This India, at least a large proportion of its constituents, still buys traditional refrigerators being unaware of frost free refrigerators into these rural markets has a considerable cost component attached to it. Companies not only have to set up the basic infrastructure in terms of office space, manpower, but also spend on transportation for moving inventory. Even LG and Samsung, which are touted as having the largest distribution network in the country, have a direct presence only in 15,000 to 18,000 of the around 40,000 retail outlets (for consumer durables) in the country. back the industry. Regular power supply is imperative for any consumer electronics product. But that remains a major hiccup in India.
Opportunities propensity to consume with preference for sophisticated brands would provide constant impetus to growth of white goods industry segment.
institutions come out with liberal incentive schemes for the white goods industry segment, growth in disposable income, improving lifestyles, power availability, low running cost, and rise in temperatures.
market, rural consumers should be provided with easily payable consumer finance schemes and basic services, after sales services to suit the infrastructure and the existing amenities like electricity, voltage etc. ables from the nearest towns, leading to increased expenses due to transportation. Purchase necessarily done only during the harvest, festive and wedding seasons — April to June and October to November in North India and October to February in the South, believed to be months `good for buying’, should be converted to routine regular feature from the seasonal character.
LIMITATIONS:
The sample size is restricted to Fifty for Refrigerator Dealers. By restricting the sample, the findings get diverted a little bit from the facts.
It is difficult to get a complete idea about the population, especially when the product is a Consumer Durables.
The Study will be conducted in Dharwar city. Hence, limiting the region, to know the overall performance in different region is difficult.
The response from the Dealers are often biased as they perceive the project trainee as an employee of the company.
The questionnaire is too large and this might test the patience of the respondent.
REFRIGERATOR QUESTIONNAIRE FOR DEALERS
1.
How many brands of Refrigerator do you keep in your shop ? ( ) Godrej
2.
( ) Haier
( ) Videocon
( ) LG ( ) Voltas
() Samsung
Rank the below brands in terms of sales turnover and in % ?
Turnover (Rank)
%
Godrej
-----------------------
-----------------------
Haier
-----------------------
-----------------------
Videocon
-----------------------
-----------------------
LG
-----------------------
-----------------------
Voltas
-----------------------
-----------------------
Samsung
-----------------------
-----------------------
On the basis of turnover (% sales of Refrigerator) 3.
Is there any seasonality in the Demand of Refrigerator ? ( ) yes
( ) No
If, Yes than what is the general peak season, --------------------------------------
4.
What are the attributes Consumer prefer while buying any Refrigerator ? (Rank them, 1 = Highest) ( ) Price
( ) Brand name
( ) Durability ( ) Consumer finance
5.
( ) Technology
( ) After sales service
( ) Others ----------------
What are the Sales Promotional Tools offered to you ? Company
6.
(a)
Cash Discount
----------------------
(b)
Free Offers
----------------------
(c)
Long Term Credit
----------------------
(d)
Sales Contests
----------------------
(e)
Others
----------------------
Of the above Tools Rank them as below,
(Rank them, 1 = Highest) (a)
Cash Discount
----------------------
(b)
Free Offers
----------------------
(c)
Long Term Credit
----------------------
(d)
Sales Contests
----------------------
(e)
Others
----------------------
7.
What are the Trade Practices offered by the various companies, (a)
Margin (approx)
------------%
(b)
Replacement
( ) Yes ( ) No
(c)
P.O.P. Material
( ) Yes ( ) No
(d)
Training
( ) Yes ( ) No
(e)
Shop infrastructure
( ) Yes ( ) No
8.
Suggestions,
9.
Name
10. Shop Name
11.
Area
THANK YOU VERY MUCH FOR YOUR CO-OPERATION
