SUMMER INTERNSHIP PROJECT WORK ON “PROJECT DISHA”
Identifying the Market reach of fans for Crompton Greaves Ltd. (Fans Division) at Crompton Greaves Ltd.
THE PROJECT SUBMITTED TO THE UNIVERSITY OF MUMBAI IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF MANAGEMENT STUDIES (MMS)
BY GUDINHO FRANCIS MARK PHILOMENA
PARLE TILAK VIDYALAYA ASSOCIATION’S INSTITUTE
MANAGEMENT VILE PARLE (E), MUMBAI – 400 400 057. 2012-2014
OF
UNIVERSITY OF MUMBAI
Parle TilakVidyalaya TilakVidyalaya Association’s Association’s Institute Of Management (AICTE Approved)
CERTIFICATE
DECLARATION
I, Mr. Francis Gudinho, MMS Student of Parle TilakVidyalaya Association’s Institute of Management, hereby declare that I have completed the project titled DISHA- Identifying the market reach for Crompton greaves (Fans Division)
during the academic year 2013.
The report work is original and the information/data and the references included in the report are true to the best of my knowledge. Due credit is extended on the work of Literature/Survey by endorsing it in the Bibliography as per the prescribed format.
Signature of the Student with Date Name of Student
ACKNOWLEDGEMENT
I would like to express my sincere gratitude to all those who helped me in completing this project.
I thank Mr. Sandeep Phatak, Senior Marketing Manager; Mr. Nitin Bhate, Western Regional Marketing Manager, Crompton Greaves; who shared their valuable time and experience through whom I received the required information for my project.
I am grateful to Dr. Deepa Rele for guiding me throughout the project. I would also thank the Institution and other faculty members without whom this project would have been a distant reality.
TABLE OF CONTENTS
INTRODUCTION
CG was established in 1937 in India; and, since then the Company has been a pioneer and has retained its leadership position in the management and application of electrical energy. The Fans Division of Crompton Greaves is the market leader in India and has been so for over a decade. It's dominance of the market is comprehensive and it manufactures fans for all sections of the market. CG has currently a level-0 distribution channel for its institutional consumers and level 1 and level 2 channels for other consumers. These levels of channels are not only used by CG but also by most of its competitors. Current Distribution Channel CG
Distributors Dealers Retailers
Modern Organized Chains
Institutional Consumers
Consumer
Figure 1
Distribution channel is very important because it is a link between company and its consumer. Well established and efficient distribution channel always saves distribution cost and time and ensures customer delight with timely delivery and quality service. In this project, a study was conducted to evaluate the reach of Crompton products in its existing distribution channel and identify its effectiveness. Dealers, distributors and retailers play a important role in this channel, so their feedback was considered for evaluating the results. In this study, we will try to find deficiencies in the current network activities and recommend possible solutions to improve the distribution channel and the increase market share.
EXECUTIVE SUMMARY
This research study has been carried out to know the penetration level of Crompton products and its challenges within the Mumbai market (Western Sub-Urbs) for fan distribution. Primary objective of this project is to understand and study the reach of the company and to find effectiveness and performance level of existing networks. Other objective for this project is to find satisfaction level of existing trade customers and what they perceive about the company’s marketing &channel efforts. In this study, various factors which affect the growth of Crompton Greaves Limited are studied and then the strategies are formulated to overcome the problems which the company is going to face. The research conducted was of exploratory type and has been conducted among the dealers/distributors and retailers, in the Mumbai market (Western Sub-Urbs). The sample size was considered for the study was 107 and all the dealers of the company are within the defined scope. For study, certain Western sub-urban markets of Mumbai are considered (Dadar to Bhayandar).
Primary
data
collection
was
done
by
interviewing
the
dealers/distributors and retailers using questionnaire. Secondary data is collected through company annual reports and previous market reports.
INDUSTRY OVERVIEW
India is a tropical country and thus fans are necessary. Therefore the Fan industry in India is well-established and has grown significantly over the years. The fan market in India consists of ceiling fans (which have a dominant share), table fans, pedestal fans, wall fans and exhaust fans and special purpose fans for industrial applications. The Indian market is estimated at 2.5 million fans per month and is growing at about 11% per annum. India has large number of manufacturing plants located across the country and producing world class fans. In fact the export of fans from India has doubled in the last few years and is a testimony to the quality and development of the Indian fan Industry. The distribution of fans in India is also well developed with over 1,00,000 selling points for fans, across the country. The fan industry has taken significant steps to ensure consumer satisfaction and leading brands not only provide good quality but also back this up with good after sales service. Major players and market share
Figure 2
COMPANY PROFILE CROMPTON GREAVES LTD.
As one of the world`s leading engineering corporations, CG provides end-to-end solutions, helping its customers use electrical power effectively and increase industrial productivity with sustainability. CG was established in 1937 in India; and, since then the Company has been a pioneer and has retained its leadership position in the management and application of electrical energy. CG’s unique and diverse portfolio ranges from transformers, switchgear, circuit breakers, network protection & control gear, project engineering, HT and LT motors, drives, lighting, fans, pumps and consumer appliances and turnkey solutions in all these areas; thus enhancing the many aspects of industrial and personal life. This portfolio has been structured into 3 SBUs - Power Systems, Industrial Systems and Consumer Products. Since 2005, CG has embarked upon an ambitious globalization strategy, growing both organically & inorganically and drawing into its fold leading international companies such as Pauwels, Ganz, Microsol, Sonomatra, MSE and PTS. Consequent to this globalization, CG now enjoys manufacturing bases in Belgium, Canada, Hungary, Indonesia, Ireland, France, UK and US, in addition to more than twenty manufacturing locations in India, employing more than 8000 employees worldwide with diverse nationalities and cultures. A worldwide marketing network of more than 150 representatives spans the globe, offering the en tire range of CG’s products, solutions and services. CG has been aggressively investing in R&D, product certifications, product quality, productivity enhancement and operational excellence. CG`s Global R&D Centre, located in India, has been recognized for its innovation and received the prestigious "National Award for the Best R&D Efforts" for its outstanding achievements in the Electrical Engineering Sector in 2008. CG`s R&D strategy aligns with the Company`s Global Vision, and focuses on creating platform technologies, shrinking product development cycle time and enhancing CG’s Intellectual Property capital.
To unify our global focus, all CG facilities across the world have taken actions to ensure that customers receive consistent "One World Quality", for all CG products and solutions in all parts of the world.
CROMPTON GREAVES FAN DIVISION PROFILE:
The Fans Division of Crompton Greaves is the market leader in India and has been so for over decades. This leadership displays itself in terms of the widest and the deepest network, a wide range of products and for all applications of air delivery- be it domestic or industrial. In the international market, the company is one of the leading exporters to countries like USA, Italy, South Africa, Ghana, Fiji, Singapore, Bahrain, UAE, Sri Lanka, UK, France, Oman, Sudan, etc. CG has manufacturing units located at Bethora and Kundaim in Goa, and Baddi in the Himachal Pradesh. CGL fan division has a number of firsts to its credit to feel proud about: 1. First company to introduce an under light ceiling fan. -Year 1985. 2. First company to introduce four blades deco fans. - Year 1985. 3. First company to manufacture one million units under single roof in India.- 1989. 4. First to introduce mini pedestal fans -Year 1992. 5. First fan manufacturing company to introduce fans to suit all pockets in all varieties. 6. First company to introduce 12 inch wall fan in high speed. Truly, CGL is the largest fan manufacturing firm in the country, continuously striving for customer satisfaction and delight. They are in the business of manufacturing, sourcing and marketing of complete range of fans and home appliances in the Indian market at large and expanding in the future into worldwide opportunities.
OBJECTIVES OF THE STUDY:
To understand and study the distribution channel of the company.
To know the reach of CG products in the market.
To evaluate effectiveness of existing distribution channel in serving consumers.
To find out the satisfaction level of trade customers.
To analyze existing and new competitors; and their marketing strategies.
To find opportunities for development of new distribution channel.
SCOPE:
The scope of the study is restricted to the region of Western sub-urbs of Mumbai city. Dealers and retailers in this region are taken into consideration for the study. The research has been conducted to ascertain the retailer’s opinion towards various brands of fans in Mumbai city with special reference to Crompton Greaves Limited. This will be helpful to identify the performance of various brands of fans and also Crompton Greaves fans specifically.
LIMITATIONS:
The survey is being conducted in parts of Mumbai city only. So the result may not be applicable to other geographical locations.
The sample size is limited to 115 retailers and dealers/distributors only.
Vague information was provided by retailers in certain areas.
Time constraints of project.
Reluctance of some respondents to share real data.
RESEARCH METHODOLOGY
Data Source Research design Research instrument Contact method Sampling method Sampling technique Sample size Sampling unit Area of survey
: : : : : : : : :
Primary Data Descriptive Research Questionnaire Personal Interview Non - probability sampling Convenience sampling 107 Retails & 12 Dealers/Distributors Dealers and Retailers of Fans Mumbai Western sub-urban
Research Approach: Quantitative approach has been used for this survey. Research Method: Exploratory research method is used to understand more about the issue. The questionnaire was designed in a manner that will provide maximum and descriptive information about the subject. This method is naturally flexible and helped in gaining an in depth knowledge of the subject. Sampling Method: Random sampling method is used for the purpose of this survey. Every element of the research was independent of any bias and purely selected by chance. Universe for the sample: Universe for the sample is fan dealers /distributors/retailers from the Western Suburbs of the Mumbai city. They are direct/indirect customers of the company who in turn sell fans to actual consumers. Sample includes some key retailers of fans from the suburbs of Bhayandar, Mira road, Borivali, Kandivali, Malad, Goregaon, Andheri, Vile parle, Santacruz, Bandraand Dadar of Mumbai Region.
Sample Size: Around 130 retailers were approached for interview in the region for collecting information, out of which 102 retailers responded positively. Similarly 5 dealers/distributors were covered. Data Collection: Primary Data: Questionnaire was prepared for dealers/distributors and for retailers. Questionnaire is designed with a mix of open ended and close ended questions. Open ended questions helped to know the opinions and complaints of the trade customers. Few questions are designed to compare services of competitors. Secondary data: Secondary data has been collected through company reports, brochures and company website.
COMPETITOR ANALYSIS:
Overall Market Reach 92.98 81.31
77.09
60.75
60.23
46.25 20.08 9.75
Figure 3
From the above graph it is clear that Orient has the maximum reach in the market followed by Crompton and Havells. On the other hand Khaitan has the lowest distribution reach among the other players in the organized market and is also less preferred by retailers.
Area wise competitor analysis:
As mentioned earlier, a market research was carried out in the western suburbs, which involved retailers and distributors. In a conversation with the retailers, I came to know whether the retailers deal in CG products or not. If yes, then what motivates them to do so? After considering the data, the market reach of Crompton Greaves and its competitors in different regional markets has been graphically represented below.
Mira-Bhyandar Market (%) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Havells
Orient
Khaitan Crompton
Usha
Bajaj
Others (Local)
Kandivali Market (%) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Havells
Orient
Khaitan Crompton
Usha
Bajaj
Others (Local)
Figure 4
Malad Market (%) 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Havells
Orient
Khaitan Crompton
Usha
Bajaj
Others (Local)
Bajaj
Others (Local)
Bajaj
Others (Local)
Goregaon Market (%) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Havells
Orient
Khaitan Crompton
Usha
Santacruz Market (%) 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Havells
Orient
Khaitan Crompton
Usha
Figure 4
Dadar Market (%) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Havells
Orient
Khaitan Crompton
Usha
Bajaj
Others (Local)
NOTE:
The above mentioned graphs do not indicate- sales or the market share of companies mentioned above. It just shows the presence of these companies in different regions through their distributors and retailers. It shows the percentage of retailers who deal in CG and their competitors’ products, out of the total sample size.
ANALYSIS OF DATA, FINDINGS AND INTERPRETATIONS
Retailers are the crucial members of the distribution network who directly sells fans to end users. So it is important to take their feedback regarding CG fans and its distribution management. In the survey 102 retailers from Western suburbs of Mumbai gave their feedback which is analyzed below:
1. Which factors attracted you to deal with CG fans? Factors
No. of Replies
Percentage (%)
Company Name Demand Quality Margins
62 9 7 4
76% 11% 9% 5%
Figure 5
This indicates that CG Brand equity is strong and main reason for association. Retailers which are indirect customer to company also perceive CG with high Brand value. Demand for fans is another reason for selling fans in their outlets.
2. How long you are dealing with CG fans?
Years
No. of Replies
Percentage (%)
1 - 3 Years 4 - 7 Years 8 - 10 Years Above 10 Years
12 18 14 28
17% 25% 19% 39%
Total
72
100%
Figure 6
This shows most of the retailers are long term customer of the company. They know company and its products for long period of time. They can be useful in branding and promotion of fans directly with customers.
3. Which companies you generally suggest to your customer?
Brands
No of Percentage Replies (%)
CG Orient Havells Bajaj Usha
39 19 24 2 6
43% 21% 27% 2% 7%
Total
90
100%
Figure 7
CG is the preferred brand with 43 % retailers and Havells holds second position. This shows that the company is successful in pushing their product through their channel members to the end customers. CG and Havells are the most recommended brands by the retailers to their customers.
4. On which criteria you suggest companies to your customers?
Criteria Brand Name Design Colour Durability Price service Availability Quality Other
No of Percentage Replies (%) 29 6 4 8 6 18 5 19 2
30% 6% 4% 8% 6% 19% 5% 20% 2%
Figure 8
Majority of the retailer suggest fans because of the brand name of the company. This means CG has goodwill in the market for its fans. Service and quality are the other two other important factors on which retailers recommend companies to their customer. This shows retailers think CG has good service and quality as well as CG has goodwill among them.
5. Whether the expected quantity of CG fans is supplied to you in time?
Particulars
No of Replies
Percentage (%)
Yes
43
61%
No
28
39%
Total
71
100%
Figure 9
Among the retailers who deal in CG products, 61% received adequate goods to cater demand.
OBSERVATIONS
Customers are brand loyal to CG, due to its quality products. Quality and service are important factors which help company to maintain its market leader position. Even though the company does not spend much on promotions, they have a strong foot hold in the market. It is a market leader in ceiling fans but fails to impress customers of wall mount, table and pedestal fans. Crompton Greaves completely loses out to local manufacturers in the exhaust division. It does not have brand recall among the youth and children. Hardly a few complaints were escalated by customers after their purchase and all those complaints were dealt satisfactorily. This bears testimony for the company’s dedication towards customer service. Looking at the potential market, many retailers want to tie up with CG. Havells is the only competitor in terms of quality, price, premium product offering and sales- as perceived by retailers. Brand name of the company is well recognized and distribution network is wide and well established. It is found that the price is a little higher for the CG fans. Some retailers have complaints about price and they suggested company should keep prices competitive, especially in the exhaust segment. Certain customers specifically prefer CG products and are ready to wait for a few days until the product is made available to them.
RETAILER COMPLAINTS
Crompton does not engage itself in advertising and promotions, which results in loss of a potential customer. Customers usually switch to more visible brands like Havells and orient. No person from the marketing or sales department visits their outlets regarding new product launches or to know about the market trends.
Retailers are unaware of distributors in their area.
Allocation of region to distributors is not clear and unorganized.
SWOT ANALYSIS
Strengths
Wide product range to provide solutions to different customer segments.
Market leadership for long period of time in fans in domestic market.
State of art integrated manufacturing base and infrastructure.
Prompt after sales service.
Wide geographical reach with extensive distribution network across India.
Good brand image of Crompton Greaves in market.
Weaknesses
Low promotion activities.
Insufficient advertisements.
Opportunities
Growing domestic market.
Recognition by international markets.
Indian climatic conditions being humid for more than half of the year.
Global warming adding to the woes of the people.
Increased penetration of electricity in rural areas.
Threats
Increasing competition from MNCs with greater financial and strategic muscle. Competitors are positioning themselves as a strong brand through extensive marketing. International players setting up local manufacturing bases.
RECOMMENDATIONS
A local exhaust manufacturer named UNIQUE has swept away the exhaust market and Crompton is not even near due to its high prices. Therefore Crompton has to consider adopting competitive prices. Crompton should set up its exclusive outlets.
This will ensure that products are available on a regular basis. It can be done either by establishing new outlets or converting the existing ones into exclusive stores. It will also help in maintaining its presence in the market and also to capture the potential customers who are now turning to brands like Havells.
Company should spend money on seasonal advertisements on television, radio and print. It should improve trade margins and introduce trade offers to push product into market. Crompton should try to be more competitive as more and more players are entering markets and indulging the customers by providing product varieties. Company should tie-up with online retail stores as online shopping trend is increasing. This will introduce CG products in a new channel and will give customers convenience of shopping. It should include its distributors in its marketing activities which will create a lasting bond and help in achieving its ultimate objective. The company should manage frequent visits to all its retailers to ensure proper distribution and eliminate any trade concerns.
LITERATURE REVIEW Strategic Advantage through Channel Relationship Management
Manufacturers, distributors, and retailers have recognized that the management of distribution channel activities offers significant opportunities for firms to create strategic advantage and achieve extraordinary financial performance. Channel activities are a major source of valued-added benefits to end users--greater than the value added by other marketing activities. Due to this substantial added value potential, firms can develop competitive advantage by reducing the costs of performing these activities or using distribution activities to differentiate their offering. Descriptive information about channel relationships in the real world offers an important source of data for product development that has not been exploited. We need to develop a better understanding of what firms are doing to effectively manage channel relationships. Practitioners are placing more emphasis on using relational norms and attitudes such as trust and commitment to maintain continuity rather than the use of a reliable control mechanisms or vertical integration. Although research has provided insights into the nature of effective relationships, we need to develop a better understanding of how these relationships develop, how they are maintained, and how members in conventional relationships deal with the uncertainties. Finally, research on channel relationships requires a refocusing of attention from the individual channel member to both parties in the relationship and the nature of the relationship.
BIBLIOGRAPHY: Websites:
www.cgglobal.com http://www.havells.com/Admin/Forms/Brochures/Havells_India_Final%20Repo rt_March%2015%20Final.pdf http://www.ushafans.com/?gclid=CKvF443Z7rACFVEX6wod5mNowA http://faculty.mu.edu.sa/public/uploads/1360935626.7652relationship%20mark7 1.pdf
LIST OF TABLES & FIGURES
SL. No.
Content
Figure 1
Current Distribution Channel
Figure 2
Major market players and Market share
Figure 3
Overall Market Reach (Competitor analysis)
Figure 4
Area wise Market Reach
Figure 5
Factors attracted to deal with CG
Figure 6
Years of association with CG
Figure 7
Brands suggested to customers
Figure 8
Criteria for suggesting a brand
Figure 9
Timely availability of goods
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