Product Analysis Air Conditioners

1

Agenda 
  

Product categorization Industry structure ± Indian Scenario Facts and figures Major players
‡ ‡ Market share Strategies 

  

Demand side Supply side Strategies for growth Future prospects
2

Product Categorization 
Room air conditioners: (RAC)
‡ Window air conditioners ‡ Split air conditioners 

Packaged air conditioners  Central air conditioners

3

Industry Structure (2005-06) 
   

More of a utility item rather than a luxury item A robust 19% growth volume aggregating 1.5 million units Significant price reductions over the past 2 years Market dynamics: Negligible rural demand Key drivers of growth
‡ GDP/Capita growth ‡ Reduced indirect taxes ‡ Import duties

4

The AC Market in India

.4 %

In d
4 .7 %

tria

11.

%

D te d , p it a n d a ka ed C e n tra R m

.

%

Data pertaining to FY2006 Net Value: Rs 46.79 billion

5

The

AC Market in India

3

it Wind w

98

6

Sector ise AC

e and
Sm Pu l c G vt M a lar c H u h l H tal vt vt ct r

ct r

Small u

7

Regionwise istribution of RACs
28 22 28 27 10 12 32 39 50 40 30 20 10 0
8

South

West Split Window East

North

Share of Organized Sector in RACs

9

Major Players: Units Sold and Market Share
Company LG Voltas Samsung Videocon Hitachi Carrier Others Units 500,000 200,000 180,000 130,000 100,000 80,000 310,000 Percentage share 33.3% 13.3% 12.0% 8.7% 6.7% 5.3% 20.7%
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Product Portfolio Co arison

11

Major Players # : LG Electronics 
Focus
‡ Product development ‡ Aggressive promotion, has been the cornerstone of LG¶s strategy 

Positioning
‡ Health Air system as a USP 

New Initiative
‡ Launched a range of commercial ACs targeted at the corporate segment
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Major Players #2 : Voltas 
Focus
‡ More on engineering excellence 

Positioning
‡ As an original equipment manufacturer for global brands like LG and Electrolux 

New Initiatives
‡ Launched new models targeted at the consumer segment. ‡ Entered into a contract manufacturing agreement with Haier for refrigerators and ACs
13

Major Players # : Sa sung Electronics 
Focus
‡ To differentiate itself on the basis of product features 

Positioning
‡ Target the higher-value commercial market segment 

New Initiative
‡ Recently announced plans to invest US$5 million to manufacture heat exchange components for ACs

14

Major Players: Others 
Videocon International Limited
‡ Differentiated its products by the launch of `Quadra Heat Exchanger Technology¶, which claims to provide better cooling and economy 

Carrier Aircon Limited
‡ Commenced distribution of Toshiba ACs 

Hitachi Home and Life Solutions Ltd.
‡ Expanded product range - launched new models with technology support from Hitachi, Japan ‡ Implementing a new branding exercise at select dealer shops and multiplexes in India, with the objective to enhance brand visibility

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Market Share in 2005-06

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Strategies for Gro th 
Facilitate growth in the domestic market
‡ Position the AC as a productivity enhancer to deepen penetration in offices ‡ Educating consumer on running cost of AC and ways to reduce it ‡ Tie-up with contractors, architects to optimally design rooms for least AC running cost 

Facilitate growth in exports
‡ Benchmark Indian plants to the best in the world ‡ Understand best practices in operations and educate Indian players ‡ Participate in tradeshows, conferences in target markets 

Work with government to shape policies
‡ Ensure implementation of safety standards ‡ Ensure national level quality/performance standards ‡ Define clear procedures/paperwork for imports/exports
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Future Pros ects 
Rapid growth
‡ Affordability ‡ Higher temperatures 

More value added models  Higher competition
‡ Global players ‡ Removal of restrictions ‡ Higher R&D
18

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