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Term Paper

Of
Research Methodology
On
Consumer Perception About Durable Goods

Submitted to: - Submitted by:-


Mr. Prateesh Srivastav Nitin Sharma
RS 1903B-30
Reg No- 10904136
MGT-516

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Contents:-
1. Acknowledgement
2. Objective
3. Overview
4. Industry Analysis
5. Literature review
6. Findings
7. Conclusion

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Acknowledgement
I am thankful to Mr. Prateesh Srivastav for providing me the task of
preparing the Term Paper of Consumer Perception About Durable
Goods . We at Lovely believe in taking challenges and the term paper
provided me the opportunity to tackle a practical challenge in the subject
of marketing. This term paper tested my patience at every step of
preparation but the courage provided by my teachers helped me to swim
against the tide and move against the wind.

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OBJECTIVE:
Objective of the study is to study the consumer behaviour about durable
goods. Here we have to study how Indian consumer is behaving , how he
behaved in past and what are the future estimates about. The study is based
upon the secondary data , after going through the secondary data we have
to draw a conclusion.

OVERVIEW:
India in its 62 years of journey has seen manifold increase in the income of
its denizens (Rs. 38,084as on 2009) and this has led to paradigm shift in the
purchasing behaviour of the people here.
There is a noticeable shift in the consumer’s preference in favour of higher
end, technologically
superior branded products, the demand being fueled by increasing consumer
awareness and
preference for new models. This shift is also because of the increase in
manufacture of branded
products and narrowing down of price between branded and non-branded
goods. Competition hasforced the companies to offer efficient after sales
service and support and this, in turn, has swayed customer preference for
branded products. Post liberalisation there has been inundation of goods
transcending the borders and the customer has a wider choice; breaking the
shackles of the consumers regarding limitations of choices. Indian consumer
durables market used to be dominated by a few domestic players like
Godrej, Allwyn, Kelvinator, and Voltas. But post-liberalization many foreign
companies have entered into India, dethroning the Indian players and
dominating the market. The major categories in the market are CTVs,
refrigerators, air-conditioners and washing machines. The rural market is
growing faster than the urban markets, although the penetration level in
rural area is much lower. The CTV segment is expected to be the largest
contributing segment to the overall growth of the industry. The rising income
levels, double-income families and increasing consumer awareness are the
main growth drivers of this industry. In addition to them the young nature of

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population and easy finance options are also fuelling the market and its
dynamics.
Consumers today are more indulgent in market place than their
predecessors. There has been shift in the definition of needs and wants. For
example a mobile phone is more of a need today then a want.
Westernisation has influenced the psyche of the Indian customers to a
degree. This report is an attempt to reflect the changes in the consumer
buying behaviour in the Indian Market especially in home appliances buying.

KEY GROWTH DRIVERS FOR CONSUMER DURABLES


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 under the 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 organized retail: Rise in organized 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), organized 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 resultmost 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 CONSUMER


DURABLES SECTOR:

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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 unorganized
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.

INDUSTRY ANALYSIS
WHITE GOODS
• Refrigerators
• Washing machines
• Air conditioners
•Speakers and audio
Equipment

KITCHEN APPLIANCES/BROWN
GOODS
• Mixers
• Grinders
• Microwave oven
• Irons
• Electric fans

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• Cooking range
• Chimneys

CONSUMER ELECTRONICS
• Mobile phones
• Televisions
• MP3 players
• DVD players
• VCD players

ATTRACTIVE AREAS FOR INVESTMENT


• High-end colour TVs
– High-end, flat screen TVs, plasma display panels and liquid crystal display
TVs registered an
average of more than 100 percent growth in 2007–08 and the trend is
expected to continue.
• Split air conditioners
– Split air conditioners have been growing much faster than window air
conditioners, growing at 97 percent in 2006–07 compared to 32 percent
growth for window air conditioners.
• Distribution and retail
– With the rural and semi-urban markets opening up avenues for expansion,
the need to have a
strong distribution network is crucial for companies to remain price
competitive.
• Mobile phones
– The mobile phone market grew at 29 percent in 2007–08 over the previous
year. The market is expected to grow at a compound annual growth rate
(CAGR) of about 28.3 percent from 2006 to 2011.

LITERATURE REVIEW
1. Mr. S. L. Rao describes some experiences in launching new products and
some insights into consumer behaviour that drove them or arose from them.
he describes events that took place in the period from 1957 to 1976. Product
launches in those years were centered round manufacturing capability. The
consumer had limited choice. So did the manufacturer who had limited
options in features that he could offer in the product. But most did consider
what the consumer wanted, her considerations in taking the purchase
decision, and ways in which it could be in favour of a particular product. The
consumer’s attitudes, habits and preferences were relevant and were
studied. Today of course this is much more the case. Production capacities,
packaging, pricing, use instructions, distribution, advertising and promotion,

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should usually have resulted from the understanding and interpretation of
these consumer attributes. Many products succeeded despite the lack of
such preparatory studies because of the monopoly that was conferred by
production and import licensing and the copying of products that had
succeeded in overseas markets. In the illustrations that I give, consciously
and in a planned manner or intuitively, consumer behaviour was at the core
of all decisions that had to do with the product. Over time, the consumer’s
concerns began to be integrated into all decisions relating to new products,
and marketing strategy became business strategy. I have some examples of
the early application of this development.
Many products and brands that dominated consumer franchise for many
years and others that were successfully launched, have declined or
disappeared now after many years. The reasons have been varied: changing
economic situation; new consumer contexts, behaviours and preferences;
competing products offering better value choices to the consumer; lack of
nimbleness of the company in adapting to changing markets; and inability to
change product images and product forms to meet new directions in
consumer behaviour. While product and brand lives have been extended in
some cases, there are many instances when life extension has not worked.
Even the most dominating brands seem to have limits to their lives. For any
chance of success, careful risk-taking, determination and courage are
essential

2. Here the author Mr. Ashutosh describes about rural consumer


behavior .He is telling that The literacy rate and also the employment rate in
the villages have increased considerably over the last few years, and
because of these factors, there is a major shift in the taste of the people.
This change in taste and buying behavior of the people led many companies
to tap this new breed of customers.

Marketers needs to understand the consumer behavior of the rural market


and then design marketing programs in which they need to associate the
brand with the lifestyle of the rural people. They need to be addressed in
their own language, by their own hero and associate the brand with
celebrations, festivals, melas, and other cultural activities for enhancing
brand’s market presence.

• Social & Behavioral Influence


• Cultural & Social Practices
• Influence of Perception
• Attitude to Quality & Price: Small pack sizes get acceptance in the
markets, as they can pay only a small price because of the nature of
income. And also, the rural population is quality conscious.

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• Brand preference and Loyalty: High in rural markets, and because of
this, the brand switching is less compared to that of urban markets.
3.According to Business marketing Research Inflation and price rise have
long been the causes of worry among the Indian consumers. Various states
and national Government seems to have gone in deep slumber about this
burning issue. In such a scenario, the very thought of setting up retail chain
could help control prices comes like a cool breeze in sweltering summer.
Presently, there are 200 retail stores in the country with promoters and
organizers who are optimistic and positive that the retail sales depot may
help in containing the soaring prices. Retail sector of Indian economy is
undergoing a paradigm shift. This sector has grown substantially and rapidly
during the past few years and liberalized policies indicate its even faster
growth. India, known as Nation of Shopkeepers, has the highest shop density
in the world- one retail outlet for around 90 persons. Retail industry, which is
US$300 billion in 2006, is likely to reach 427 billion US dollars by 2010 and
to 637 billion US dollars by 2015.
4. According to Mr.B.B.Goyal and S. Jagwinder Singh India has been
acknowledged as one of the most promising and fastest growing economy of
the world. Besides urban and semi-urban areas, rural India has a huge
potential. Many foreign brands are dominating particularly in consumer
durable category. The purpose of the study is to understand the comparative
attitudes of rural and urban Indian consumers towards the foreign products
against Indian products. Both rural and urban consumers have rated foreign
products very high as compared to domestic products. Rural consumers
were found more impressed than their urban counterparts with foreign
products in terms of maintenance services, technical advancement, prestige,
durability, quality/performance, and wide choice of size and model. No
significant differences were observed between rural and urban consumers in
terms of ‘good style and appearance’. Indian producers in the coming times
are going to face a very strong threat from foreign brands, particularly in
consumer durable category.
5. According to Chandrasekaran Kathiravanaa, Natarajan
Panchanathamaa and
Sivasundaram Anushanb brand attributes consist of ‘bits’ of information
that are linked to a brand name in consumer memory and that, when
combined with the brand name, make up a brand’s image .The brand
attributes themselves come from a variety of sources, including consumer
experiences, marketing communications, and/or word of mouth . The
linkages between the brand name, its attributes, and other brands in the
marketplace mean that associated attributes can be unique to the
consumer, unique to the brand, or shared with other brands . Two-wheeler is
an important product item in modern society both urban and rural areas.
Consumers mainly purchase the product for their covenience. Gradually it is
becoming more popular in the consumers' world and its demand is world-
wide .Consumers purchase decisions for twowheelers are always influenced
by a number of factors, which lead them to select a particular brand in

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preference to others. In this study ten attributes are considered asimportant
cues, which lead consumer to select a particular brand of two-wheeler. This
study examines products from a high involvement consumer product
category.
Researchers include brand, which is highly similar on measurable attributes
such as cylinder capacity (CC). The reasoning is that the nature of the
competitive marketplace offers many brands within distinct subcategories
and this may provide further understanding of brand choice relating to
present market conditions.
6. According to Bhagaban Das ,Sangeeta Mohanty and Nikhil Chandra
Shil consumer’s buying behavior is divergent and situational. For durable
products, such behavior got different dimensions again. To make the study
simple and informative, color television is used to represent the consumer
durable markets. Television, as a product, is getting the status of essential
commodity all over the world. The potential of TV market is indeed quite
enormous. The Indian consumers were indifferent in choosing the brand
since a lot of close substitutes were available in the market. However, they
have changed ever since the India liberalized its economy. Choosing the
right brand of television is difficult enough when there were half a dozen
brands and all of these claimed to give excellent picture quality. Marketing
managers are interested not only in the product but also the behavior of the
consumers because it gives them the right orientations for product
development and positioning. The level of consumer's satisfaction provides
the scope for repeated purchases and brand loyalty that lead to optimum
profitability. This research finds that consumers' perception on buying color
television is mostly affected by the factors, such as, structural add-ons,
words of mouth, technical features, durability, ground reality etc.
7. According to The FICCI Survey, based on feedback and interaction with
representatives of consumer durables industry, allied industry organizations,
associations, Government agencies and public sector undertakings, reveals
that sector is poised for a quantum leap due to technological improvements,
falling prices due to competition, aggressive marketing and declining import
tariffs. The Survey reflects the changing dynamics of consumer behaviour –
luxury goods are now being perceived as necessities with higher disposable
incomes being spent on lifestyle products. There is a discernible shift in the
consumers’ preference in favour of higher-end, technologically superior
branded products, the demand being spurred by increasing consumer
awareness and preference for new models. This shift is also explained by the
growing trend of products being manufactured in the organized sector of the
economy and the narrowing down of the price differential between branded
and non-branded goods. Competition has forced companies to offer efficient
after sales service and support and this, in turn, has swayed customer
preference for branded products. The Survey highlights the positive growth
trends in consumer durable segments – white goods and consumer
electronics during April-March 2004-05 and points to sustained growth

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during 2005-06 because of emerging opportunities and strong fundamentals
of the economy.
8. 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 behavior
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.
The consumer durables industry can be broadly classified as consumer
electronics and consumer appliances. The consumer appliances category
can be further segmented as white and brown goods.

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FINDINGS
The rising rate of growth of GDP, rising purchasing power of people with
higher propensity to
consume with preference for sophisticated brands would provide constant
impetus to growth of White goods industry segment. Penetration of
consumer durables would be deeper in rural India if banks and financial
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. While the consumer
durables market is facing a slowdown due to saturation in the urban 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. Currently, rural
consumers purchase their durables from the nearest towns, leading to
increased expenses due to transportation. Purchase necessarily done only
during the harvest, festive and wedding seasons. Rural India that accounts
for nearly 70% of the total number of households, has a 2% penetration in
case of refrigerators and 0.5% for washing machines, offers plenty of scope
and opportunities for the white goods industry.
The urban consumer durable market for products including TV is growing
annually by 7 to 10 %
whereas the rural market is zooming ahead at around 25 % annually.
According to survey made by industry, the rural market is growing faster
than the urban India now.The urban market is a replacement and up
gradation market now. The increasing popularity of easily available
consumer loans and the expansion of hire purchase schemes will give a
moral boost to the
price-sensitive consumers. The attractive schemes of financial institutions
and commercial banks are increasingly becoming suitable for the consumer.
Consumer goods companies are themselves coming out with attractive
financing schemes to consumers through their extensive dealer network.
This has a direct bearing on future demand.
The other factor for surging demand for consumer goods is the phenomenal
growth of media in

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India. The flurry of television channels and the rising penetration of cinemas
will continue to spread awareness of products in the remotest of markets.
The vigorous marketing efforts being made by the domestic majors will help
the industry. The Internet being now used by the market functionaries that
will lead to intelligence sales of the products. It will help to sustain the
demand boom witnessed recently in this sector. The ability of imports to
compete is set to rise. However, the effective duty protection is still quite
high at about 35-40 per cent. So, a flood of imports is unlikely and would be
rather need based. Reduction in import duties may significantly lower prices
of products such as microwave ovens, whose market size is quite small in
India. Otherwise, local manufacturing will continue to stay competitive. At
the same time, there will be some positive benefits in the form of reduction
in input costs. Washing machines and refrigerators will also benefit from
lower input costs.
According to a study by the McKinsey Global Institute (MGI), Indian incomes
are likely to grow threefold over the next two decades and India will become
the world's fifth-largest consumer market by 2025. In the given scenario,
urban markets will continue to fuel the Indian economy for quite some time
to come. Moreover, expenditure by the middle class accounts for the bulk of
India’s urban consumer expenditure. About 61 per cent of total urban
income comes from households that can be classified as middle class—
earning between US$ 1,493 and US$ 9,955 a year. Further, India is likely to
see rapid urbanisation, with around 45 per cent of Indians living in urban
areas by 2050, up from 30 per cent in 2007-08, according to a study by
National Council of Applied Economic Research's (NCAER).
According to a report by McKinsey, India's overall retail sector is likely to
grow to US$ 419.93 billion by 2015. According to global real estate
consultant, CB Richard Ellis, India has moved
up to the 39th most preferred retail destination in the world in 2009, up from
44 last year. The
turnover of the organised retail segment in India is pegged at around US$
8.1 billion. It is expected to reach US$ 51 billion by 2010. Retail opportunity
is slated to rise by about US$ 160 billion in India in five years. In urban India,
modern retail is likely to grow from the current 9.6 per cent of total retail to
26 per cent in the next five years, as per Technopak Advisors The Indian
consumer durables market seems to be relatively untouched by the
economic slowdown. The consumer durable goods output witnessed a 2.5
per cent rise in durables output in the first quarter of 2009, according to a
report by the Development Bank of Singapore (DBS).
Colour televisions have seen an increase in sales, growing 2 per cent to 2.8
million units. Whirlpool is on the expansion mode and is targeting a 22 per
cent share of the US$ 423.28 million washing machine market in India by the
end of 2009, and is launching a range of new products with an investment of
US$ 4 million for the same. Moreover, a large number of hi-technology
durables are expected to flood the US$ 4.03 billion Indian durables market in

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2009. Samsung, LG, Haier and Videocon are among companies planning new
product launches in the coming months.

CONCLUSION
Consumer durable goods industry is growing more than expected in India
because of huge population of India. The Indian consumer remains one of
the most upbeat globally. In fact, it is widely believed that the Indian market
will fuel the growth of multinational companies in the coming years. While
most leading companies are cutting costs in the US and Europe, they see
India as a strategic market, which can fuel their growth.

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