Professional Documents
Culture Documents
Marketing Plan For Switchgears
Marketing Plan For Switchgears
L&T - Switchgears
MARKETING
MAN 4045M.
FT ACC MBA 2010
STATEMENT OF AUTHENTICITY:
I certify that this assignment is the result of my own work and does not exceed the
word count mentioned below.
Word Count: 3559
(Excluding references, bibliography, graphs, tables and titles)
MARKETING ASSIGNMENT
Contents
EXECUTIVE SUMMARY: ................................................................................................................................. 4
BUSINESS MISSION: ...................................................................................................................................... 4
EXTERNAL MARKETING AUDIT: ..................................................................................................................... 5
Macro Environment: ................................................................................................................................. 5
Political:................................................................................................................................................. 5
Economic: .............................................................................................................................................. 6
Technological: ....................................................................................................................................... 7
Legal: ..................................................................................................................................................... 7
Micro Environment ................................................................................................................................... 8
The Market:........................................................................................................................................... 8
Distribution of Consumers: ................................................................................................................... 9
Porters Five Forces: ............................................................................................................................. 10
Internal Marketing Audit: ....................................................................................................................... 12
Operating Results:................................................................................................................................... 12
Strategic Analysis: ................................................................................................................................... 14
Current Marketing Objectives:............................................................................................................ 14
Market segmentation: ....................................................................................................................... 14
Competitive advantages: .................................................................................................................... 15
Positioning: ......................................................................................................................................... 16
Marketing Mix Effectiveness:.................................................................................................................. 17
Marketing Structures: ............................................................................................................................. 18
SWOT ANALYSIS: ......................................................................................................................................... 18
Strengths: ................................................................................................................................................ 19
Weakness: ............................................................................................................................................... 19
Opportunities: ......................................................................................................................................... 19
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Threats: ................................................................................................................................................... 20
MARKETING OBJECTIVES: ........................................................................................................................... 20
Strategic Thrust: ...................................................................................................................................... 21
Market penetration: ........................................................................................................................... 21
Market development: ......................................................................................................................... 21
Product Development: ........................................................................................................................ 21
Diversification: .................................................................................................................................... 22
Strategic Objectives: ............................................................................................................................... 22
CORE STRATEGY: ......................................................................................................................................... 23
Target Markets:....................................................................................................................................... 24
Competitors Market:............................................................................................................................... 25
Competitive Advantage: ......................................................................................................................... 25
MARKETING MIX DECISIONS: ...................................................................................................................... 26
BUDGET: ...................................................................................................................................................... 27
ORGANIZATION & IMPLEMENTATION: ....................................................................................................... 28
CONTROL:.................................................................................................................................................... 29
REFLEXIVE ACCOUNT: ................................................................................................................................. 30
Why L&T EBG Switchgear division? ..................................................................................................... 30
Highlights: ............................................................................................................................................... 30
Practical vs. Theoretical: ......................................................................................................................... 30
References: ................................................................................................................................................. 31
BIBLIOGRAPHY: ........................................................................................................................................... 33
Appendix: .................................................................................................................................................... 33
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TERMS OF REFERENCE:
Larsen & Turbo (L&T) operates as leading Engineering, construction and manufacturing company based
in India. It has six divisions namely Engineering & Construction Projects, Heavy engineering,
Construction, Electrical & Electronics (EBG), Machinery & industrial Products and IT Services. This report
concentrates on the Switchgear section of EBG division which contributes to 1000 crores INR to the total
revenue. This report would be formulating a marketing plan for Switchgear division of L&T in the Indian
market.
EXECUTIVE SUMMARY:
The marketing plan analyses the Switchgear industry in INDIA and identifies key growth Opportunities
for L&T.
The analyses are done in the following way:
Macro environment factors directly affecting the company short run and long run.
Micro environment factors analyzing the strengths and weaknesses of the competitors and
substitutes.
Current marketing objectives, competitive advantage, core competence and positioning of the
company using various marketing tools.
Putting it together under the SWOT analysis.
In order to gain growth and market share, following strategies are recommended:
BUSINESS MISSION:
L&T is in the business of manufacturing Low voltage Switchgears. Its business vision is to be
entrepreneurial in bringing innovative class electrical products, thereby attaining customer satisfaction
and to create value for its shareholders and meeting expectations of the employees, Stakeholders and
society at large. It also aims to continuously learn and attain benchmarks in all its products. (L&T.com,
2010)
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and switchgear.
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Effect: Opportunity.
Economic:
The Indian economy has witnessed robust growth of approx. 9% in the last 3 years. However, the global
economic downturn has caused GDP growth to decline to 6% in 2009 which is still better during the time
of recession as per the Global standards.
The increasing disposable income raises the standard of living, increasing consumption of
powered appliances such fridges, AC, Washing Machines etc. hence creating a demand for
Power and ultimately Switchgears. The present per capita consumption given below is expected
to grow sharply.
Effect: Opportunity
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Recession:
The recession wave felt across the country has put credit constraints on expansion projects, up
gradation of Power systems, electricity distribution etc. Many Companies as well have placed a cap on
the Budgets, not to expand during the time of recession. The interest rates has also increased causing
undesirable effect on the companies which want to expand as well to the companies which are entering
into the country.
Effect: Threat.
Technological:
Technology is becoming more advanced everyday and intelligent MCC and devices introduced in the
market and the more electrical devices are getting upgraded to Electronic devices. The old technology is
eradicated i.e Fuse is been replaced by the switching (Tripping) devices such as the MCB, MCCB etc.
Steve Lane who invented the principle of the modern day magnetic actuators mentions New designs of
switchgear will evolve, designed from scratch with every component as simple and reliable as possible
to capitalise on the potential of the magnetic actuator mechanism to be as trouble free as the latest
interrupter technology. World energy consumption has risen by 45% since 1980 and it is projected to
increase by another 70% by 2030. (Schneiderelectric.com). the simple and powerful solution is
intelligent energy efficiency. Therefore it is a threat to many existing products but definitely a challenge
for the R&D to keep up the pace with changing technology in making energy efficient switchgear.
Effect: Threat
Legal:
Heavy penalty is laid by the State electricity Boards on industries which do not maintain unity power
factor resulting in most industries to implementing reactive power management which involves the
Capacitors and the Contactors.
Effect: Opportunity.
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Micro Environment:
The Market:
The total Switchgear Market is $1600million and is expected to grow 2.5 times by 2020(Foster and
Sullivan, 2009). This is just the low and medium voltage switchgear products. The detailed split is given
below.
$(Millions)
4500
4000
3500
3000
2500
1600
1360
2000
1500
1000
500
0
2007
2008
2020
Year
2007
1360M
Projected
2020
4173.2M
Switchgear Split-up:
Medium
Voltage
47%
Low voltage
53%
Source: Frost and Sullivan, 2009
The Switch gear Market is expected to grow every year and rapidly to 4173.2M in 2020 (Frost &
Sullivan, 2009) while the high voltage switchgear market is supposedly to be growing because of the
renewable energy. L&T Market share in the Low voltage Switchgear Market is almost about 19% of the
low voltage switchgears.
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This information was made available since I worked in the same industry.
Others
22%
L&T
19%
L&T
Siemens
Schneider
GE
8%
ABB
21%
Siemens
19%
ABB
GE
Others
Schneider electric
11%
Type
Panel Builders
Comments
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System Integrators
Electrical Dealers
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Internal Marketing Audit:
Operating Results:
L&T overall Performance
Source: Larsentubro.com
Electrical and electronics segment:
EBG Performance
(In Crores)
2007-08
2006-07
2005-06
2004-05
Gross Revenue
2663
2067
1582
1220
EBITDA / Revenue %
15.8
15.9
15.5
12.7
Export Earnings
290
170
140
97
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2009
In INR - Crores
1242
Source: email from Mr. Abbas ,GM ,C&S electric (Primary source)
The electrical & electronics division recorded revenues of INR24, 850 million (approximately $617.3
million) in FY2008, an increase of 39.5% over 2007 (Market line). The total gross revenues of the E&E
segment in 2009 was close to 28 million and the switch gear division reported close to 1242 crores INR.
In 2009 the growth was hindered by the Global recession and many of the companies had put a hold on
their expansion projects and some have even cancelled because of which the revenues have not grown
as expected. As per the latest information as the financial year ends this march 2010 the revenues have
gone up and till 1st of march 2010 it is 1330 crores which is a close to 7% with another 31 days to go. L&T
expects to grow close to 8-9% which is a good sign that the market is stabilising. The margins they are
making are good as showed in the early chart.
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Strategic Analysis:
Current Marketing Objectives:
a. Expanding Product Basket: L&T is currently focussing on expanding from Low voltage into
medium voltage Switchgear and as a result of that has acquired TAMCO.
b. Customer Friendliness: To provide expert assistance in product selection, specification and
effective post-sales service through a wide network of service centres .(L&T.com)
c. Establishing business partners: L&T is adding new dealers in the country so that their presence is
spread nationwide ensuring the availability of its products in every nook and corner with speedy
deliveries to the customers.
Market segmentation:
Segmentation on the basis of customer groups:
L&T
Switchgear division
OEM
Original Equipment
Manufactuers
INDUSTRY
AGRICULTURE
BUILDING
UTILITIES
L&T has divided its segments into different divisions as above and the below segmentation provided is
based on the Products hierarchy. There are different products under each category.
Segmentation on the basis of Products:
Control gear
Power gear
Motor starters
MCCB
MPCB
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Drive systems
Competitive advantages:
L&T has invested huge amounts of money in R&D to innovate new products and cost effectively; but the
competitive advantage of L&T is the cost aspect. It is the cost leader and dictates the Switchgear market.
The brand image it has built over the last 40 years through its finest products has made it to sustain as
well. (Refer appendix for analysis on the Prices)
COMPETITIVE BASE
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MARKETING ASSIGNMENT
Positioning:
High price
Wide product
range
Narrow
product range
Low price
SIEMENS
ABB
SCHNEIDER ELECTRIC
L&T
The perpetual map clearly shows the need for L&Ts Product diversification and its rest of the
competitors are quite well established in quite a variety of products.
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Marketing Mix Effectiveness:
Product
Promotion
Place
Price
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Marketing Structures:
Above is the Business structure but the existing Marketing structure is that under Electrical and
Electronics there is single SBU for the Standard Switchgear Products. Under the SBU head are certain
Segment managers who monitor the sales of their respective segments such as agriculture, industry etc.
Sales engineers according to region wise are spread across and they report to the area Mangers who in
turn report to the Sales Director. Presently there are no Marketing mangers for different segments
though there are only sales mangers and there are no liaison managers who work between the different
operating units of L&T because of which much internal orders go to other competitors.
SWOT ANALYSIS:
STRENGTHS
WEAKNESS
1.Lack of Synergy
between different
vertical business units
2.Long Delivery period
of certain goods
2.First to Market
advantage
3.Cost Leadership
THREATS
OPPORTUNITIES
1.Acquisition of TAMCO
2.Exisitng APDRP and
RGGVY projects
2.Stiff competition
3.Loosing Meher
Capacitors to
competitors
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MARKETING ASSIGNMENT
Strengths:
A strong Brand name:
L&T being in the switchgear market for the last 40 years has a strong market name. Their Motor starters
has the largest market share and used by almost all farmers across the country. Even before other MNCs
came into India during the early 90s L&T has established its name strongly. It had the added advantage
of first to the Market.
Cost Leadership:
L&T comparatively to competition has the lowest prices for its products which is a key strength to the
price sensitive customers especially in the times of recession.
Weakness:
Lack of Synergy between different vertical business units:
L&T has different verticals quite diversified into construction, heavy engineering etc which requires the
services from the Switchgear division. Presently there is a lack of synergy between these departments
and the benefit is sucked by the competitors.
The delivery period of certain good specifically takes quite a bit of time especially in the contactors area.
Opportunities:
Existing Projects ADRPP, RGGVY:
The Present initiatives of the Government of India investing APDRP(Accelerated Power development
reform programs) and the Rajiv Gandhi Grameen Vidyutikaran Yojana Scheme of Rural Electricity
Infrastructure and Household Electrification which will provide power to 7.8 crore household in the next
5 years(Ministry ofPower,2009) provides even much bigger junk of Market to occupy.
Acquisition of TAMCO:
TAMCO Switchgears manufactures Medium Voltage switchgear products comprising Vacuum Circuit
Breakers (VCBs), Ring Main Units (RMUs), Gas Insulated Switchgear (GIS) and Switchboards. TAMCO is a
good platform to pursue the companys domestic and international ambitions in MV switchgear
business (Market line). The combination of the Low voltage along with the Medium Voltage switchgear
is giving the company an opportunity to maximize the Market share and penetrate into different
segments of the Markets.
MARKETING ASSIGNMENT
Threats:
Lookalikes and Duplicates:
Look likes and duplicates are increasing and is a threat to the company and as the customers have
increased access to fake products rather the original.
Stiff Competition:
Market is growing and there is stiff competition .This makes the market more dynamic and is price
sensitive. There is a stiff price war on discounts and is threat for the companies as it eat the profits of
the company.
Loosing Meher Capacitors to competitors
L&T who held Meher Capacitors has been taken over by Schneider Electric which leaves L&T to depend
on their competitors for the reactive power management (Schneider electric.com, 2009)
MARKETING OBJECTIVES:
The Market objectives of the company will be
To target new customer base through concentrated approach via detailed segmentation
Developing new medium and high voltage switchgear products to remain effective in the market
and expand wide product basket.
To liaison with its other divisions creating synergy between its other operating units.
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MARKETING ASSIGNMENT
EXISTING
NEW/RELATED
EXISTING
MARKET PENETRATION OR
EXPANSION
MARKET DEVELOPMENT
NEW/RELATED
Strategic Thrust:
PRODUCT DEVELOPMENT
DIVERSIFICATION
Market penetration:
It is proposed that the company concentrates on its lost customers. L&T lost many of its customers
because of the inception of many competitors. They should strongly focus on the lost customers to
revamp its sales. As a strategy for its existing customers it should introduce the loyalty schemes and turn
over discounts.
Market development:
It is proposed that the company markets its existing products at the same price for existing market. The
new market they need to concentrate is the medium voltage market as they are new in this market.
They need to have attractive prices which through which they can capitalize on the market share.
Product Development:
Product development is a growth strategy where L&T has to aim new products into existing markets.
They need to concentrate on the new products they are acquiring from TAMCO, which are to be type
tested and certified by the authorities like ERCA, CPRI. They need to be approved by leading Electrical
consultancies so that their name can be inducted into the specifications and tender documents.
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MARKETING ASSIGNMENT
Diversification:
The Company has realised its need to diversification and has indeed done over the past years but limited
to the engineering for Industries. L&Ts main source of income is thro the ECC division which accounts
for close to 70% of its revenues which is a concern. It has concentrated sales which needs to look on
unto other divisions and should find ways to explore to diversify (L&T.com)
Strategic Objectives:
The Switchgear Market is in the early stages of Maturity. Hence the Market strategy is to be based
sustained Marketing activities. The below BCG matrix will help us draw further inferences of the strategy
we need to follow.
CASH COWS
LOW VOLTAGE SWITCHGEAR
CONTACTORS,RELAYS
DOGS
STARS
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MARKETING ASSIGNMENT
products as the competition is only against ABB and Siemens. Hence the strategic objective is to
concentrate on the medium voltage switchgears.
CORE STRATEGY:
Organizational
segmentation
Macro segmentation
Industry
Micro segmentation
The need is basically to micro segment which will enable to define the target markets and the
customers which when concentrated will yield good numbers as they same a particular choice
criteria of price or similar usage.
At the same time there should be a Manger just to liaison between different operating units
because they generate voluminous business.
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Target Markets:
Power plant
Mordernisation
& alernate
Energy Sources
Industrial
Switchgear
Division
Target
Markets
Commercial &
Infrastructure
Utilities and
Residential
Utilities Segment
An additional capacity of 78000 MW is expected to be generated as a part of the 11th five year
plan (2007-2012)(Power ministry of India).This expansion in India's present generation capacity
is a big market for LV and MV Switchgear.
GOIs Schemes such as APDRP and RGGVY is concentrating on power to villages in India.
Opportunity: LV and MV switchgear market growth with about 7.8 crore home to be illuminated.
Industrial Segment
India's industrial sector accounts for nearly 30.0 percent of GDP (Data monitor) and a increase in
process automation in industries is expected to support push-buttons, contactors and
switching/Protection relays, as well as motor control centers.
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MARKETING ASSIGNMENT
Commercial and Infrastructure segment
Massive investments from the private and public sector are expected to steer the growth in
infrastructure segment as indicated as the opportunity above in the SWOT analysis on the
infrastructure.
Opportunity: RMUs, ISG, ACBs, MCCBs Market will rise as a result of this growth in the
Infrastructure development
Residential Segment
As the GDP is expected to rise which in turn will raise the disposable income of individuals will
foster the growth of the residential sector and is likely to drive the MCBs, ELCBs and MCCBs
market.
Indian Power plants are on an average age of 30 years and needs overhauling and
modernization. This will benefit the switchgear market as there will ample of replacements.
Power plant modernization and refurbishment is expected to support growth of the switchgear
market.(World bio energy, 2010)
The Indian Government continues to research and invest in renewable energy sources such as
wind, solar and hydroelectric power. There is already a surge of FDI in windmill area and will
boost the switchgear Market. The MCCB and MCB markets are expected to benefit considerably
from alternative energy expansions.(Ministry of new and renewable energy, India)
Competitors Market:
The different competitors will also concentrate on the above markets and there could be new players
who could join in the market. But L&T having established its name in the market for the 40 years should
remain as a cost leader to maximize the market share.
Competitive Advantage:
The competitive advantage of the company is that it has to remain a cost leader. It has to introduce the
medium and high voltage switchgear in the market to widen the product basket so that L&T becomes a
one stop shop for industrial Electrical Solutions can offer the entire range of switchgear to setup the
industry.
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MARKETING MIX DECISIONS:
Product
Promotion
Place
Price
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MARKETING ASSIGNMENT
BUDGET:
From the Profits encased in 2008-2009 is close to 100 Crores (INR), in which the proposed amount for
budget is 10 crores (INR). This amount would be distributed amongst the marketing mix in the following
way:
Marketing Mix
Product
Price
Reasons
New products being launched in the market calls
for the extension of the Product lines. The new
product needs to be certified and approved
widely for product acceptance.
Effective databases of different companies
strategy and its effect of different segments of
customers are to be monitored. Regular price
lists to be circulated among the dealers and
various industries.
Explaining about the different products and its
application in different industry will improve the
market share and obviously since L&T is
launching its Medium voltage switchgear
Products needs to increase awareness. It also
has to invest into Product literatures.
Awareness of the new products that is launched
in the Market.
Existing People and the new people recruited
should have good product knowledge and its
applications which is the boom for the company.
New channel partners i.e. dealers are to be
developed and the existing ones needs to be
revamped to maximize the reach and presence.
Survey is to be done which results in the
identification of the bottle necks so that process
or people can be improved.
27
Percentage
of Budget
30
20
5
10
20
10
MARKETING ASSIGNMENT
Customers
response (Lost
customers)
10%
Place : Dealers
Meet and
channel
development
20%
Budget Allocation
Product
30%
People
10%
Price
5%
Promotion:
Seminars and
conferences
20%
Sales Manger
Switchgear
Sales Manager
Infrastructure
Marketing Manager
Switchgear
Sales Manager
Industry
Marketing
Manager
Infrastructure
Sales Executives
28
Marketing
Manager
Industry
MARKETING ASSIGNMENT
ROLES
Role: Final authority
Managing Director
Manger
- Liaison
Feedback
Feedback
Role: Marketing
Planning and
Implementation
Marketing Managers
Manger
Other
operating
divisions
HR getting approvals to arrange to restructure and arrange training for Sales engineers
regarding products and its applications.
CONTROL:
Control is to done by the array of measures available to the Marketing managers called as the
operational Control as explained by Jobber (Principles and practice of Marketing,2010)
Sale Analysis
Customer Satisfaction
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Distribution/availability
Market Share
Gross margin
There are other parameters which can be critical for targeted customers which can be made just for the
specific segments.
REFLEXIVE ACCOUNT:
Why L&T EBG Switchgear division?
For the last 5 years I have been in this industry and had a close association with L&T. I have always been
thrilled with the growth of the Power and switchgear Products. L&T is the oldest switchgear company in
India has the finest of products and widest market and carries such a brand image though diversified in
various segments. So having spent some considerable time in this industry I felt it would be great to do a
marketing plan for L&T.
Highlights:
This assignment gave an insiders view of the industry with insights on strategies and objectives of
company as told by senior management in their annual reports and in web sites. Much of secondary
data helped me though some information I had received from the primary source as company
employees. There was not much data on the market share of different companies and is not in the
public domain. Secondly it quite hard to calculate the market shares as there are multiple switchgear
products and each product has a different market Position. Hence the market share information shared
above reflects the cumulative position of different competitors along with their products.
Tough I have been a marketer this report gained me an insight of the different key tools available for
analysis. I also realised there are many parameters which needs to be considered before forming a
Marketing plan.
Practical vs. Theoretical:
Having chosen L&T and after collecting considerable data which was not quite easy, making the plan was
perceived to be simple. Since I was in the Market I was able to relate to the problems which I faced to
the things I studied. I was able to give a better form for the different things I had in my mind. But the
application of the theory to the organization proved to be thought provoking. During the process, I also
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MARKETING ASSIGNMENT
learnt how maximum business can be achieved through internal business within the other operating
SBUs just by having a manager to liaison. Another key thing is about bundling the products required for
project seemed to be good. The Market segmentation indeed to concentrate where the investments are
actually happening will boost the sales was also evident when the report was carried out.
This coursework on a whole has kindled further interest in Marketing and I consider it a serious career
option. Overall the assignment along with series of lectures has enlightened much about the field of
marketing and has enhanced my knowledge.
References:
GDP growth in India and future 2010 -Data monitor report (2010) Country Profile: India GDP
http://www.marketlineinfo.com/library/DisplayContent.aspx?N=4294669489
(Accessed via Metalib 21.02.2010)
Per capita consumption of Electricity in BRIC Countries CEA, CIA World fact book 2008
(Accessed 21.02.2010)
Technology in Switchgear gear on Actuator Steve lane, 2010 http://www.hssltd.com/assets/files/Switchgear%20developments%20for%20IME.pdf (Accessed 22.02.2010)
MARKETING ASSIGNMENT
www.energy.frost.com (accessed 21.02.2010) Switchgear Split up
http://blog.taragana.com/pr/indian-low-and-medium-voltage-switchgear-markets-to-reboundby-2010-driven-by-demand-from-various-segments-says-frost-sullivan-2602/ (Accessed on
22.02.2010)
Target Markets for Low voltage and Medium voltage switchgear in India- Abhishek Gokhale,
Industry Analyst Frost and Sullivan 2009
http://www.frost.com/prod/servlet/market-insight-top.pag?Src=RSS&docid=156855178
(Accessed on 24.02.09)
Rajesh Jeyachandran, Assistant Manager BCH Electric Limited (2010) - Market share of the
different Switchgear Companies in India. Through email dated 17.03.2010.
Abbas GM, C&S Electric Switchgear, 2010 L&T Performance over last three years including the
present financial year 2010 Through email dated 14.03.2010.
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BIBLIOGRAPHY:
Jobber, D. (2010). Principles and practices of Marketing 6th edition McGraw Hill
McDonald, H.B.M. (1989). Marketing Plans How to Prepare Them: How to use them. Oxford:
Butterworth-Heinemann.
Appendix:
Price Analysis:
S.NO
BRAND
L&T
SIEMENS
ABB
SCHNEIDER ELECTIC
MODEL
MNX 18A
3TF - 16A
AL16 16A
AV1 16A
List
Price
Discount
Landed Price
INR
780
50%
390
745
40%
447
750
45%
413
670
40%
402
33