Worldwide Consumer Electronics Market

The consumer electronics industry has witnessed a phenomenal growth over the past few years. This growth can be attributed to the increasing effect of state of the art electronic devices on the market. The consumer electronics industry is ushering in the dawn of Convergence. It is the confluence and merging of hitherto separated markets of digitalbased audio, video and information technology, removing entry barriers across the market and industry boundaries. This convergence of technologies has resulted in a greater demand for consumer devices, be they portable, in-home (mobile phones, digital camera) or in-car (CD/DVD players), offering multiple functions. The revolution brought about by Digital technology has enabled the consumer electronics sector to profit from the growing interaction of digital applications such as: camcorders, DVD player/recorder, still camera, computer monitor, LCD TV etc. It has also witnessed the emergence of mobile telecommunications technology, incorporating both digital visual and digital MP3 capabilities. The computer industry has also benefited by being able to make its way into consumer's living rooms. HDTV's with VGA connections and SD/MMC card slots, personal media players, and Microsoft-based Media Center PCs have pushed the two industries even closer together than before. The overall revenue earned through the sale of audio, video and gaming consoles constitutes the international consumer electronics market. The global sale of consumer electronics is estimated to exceed all expectations to touch an all time high of $135.4 billion in 2006, which indicates 8% increase from 2005. By the year 2008, sales are forecasted to soar up to $158.4 billion, up BY 65% over 2000. The Asia Pacific region is the market leader wielding the biggest chunk of the market, closely followed by Europe. The European market share is expected to take a drubbing due to the growing demand for consumer durables in the Asia Pacific consumer electronic market. Japanese companies have captured the consumer electronics market. World famous brands such as Sony, Panasonic and Matsushita are all owned by these Japanese manufacturers. Korean companies such as Samsung and LG are all trying to join the Japanese bandwagon. Samsung can claim to be the world's fastest growing electronic company.

SWOT Analysis Of Electronics
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Strengths
1. Presence of established distribution networks in both urban and rural areas 2. Presence of well-known brands 3. In recent years, organized sector has increased its share in the market vis a vis the unorganized sector.

Weaknesses
1. Demand is seasonal and is high during festive season 2. Demand is dependent on good monsoons 3. Poor government spending on infrastructure 4. Low purchasing power of consumers

Opportunities
1. In India, the penetration level of white goods is lower as compared to other developing countries. 2. Unexploited rural market 3. Rapid urbanization 4. Increase in income levels, i.e. increase in purchasing power of consumers 5. Easy availability of finance

Threats
1. Higher import duties on raw materials imposed in the Budget 2007-08 2. Cheap imports from Singapore, China and other Asian countries

HOW THE INDUSTRY BREAKS DOWN
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 The largest are multinational conglomerates with more than 100,000 employees.  The smallest often have only one office with fewer than 50 employees focused on one product.  In the middle are manufacturers that offer a range of products within a certain category, such as speakers and audio accessories.  Industry observers usually break down the market by product category rather than company size.

Consumer durables are items that provide a flow of services to a consumer over a period of time. Examples include new cars, household appliances, audio-visual equipment, furniture etc. The real level of spending on durables has surged in the last eight years. Among the explanations are:  Falling prices for many durable products – arising from rapid advances in production technology and the effects of globalization which means that we can now import many of these durables more cheaply from overseas  Low interest rates which have encouraged people to spend more on “big ticket items” – there has been a surge in demand for consumer credit

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 Strong consumer confidence and borrowing levels. The demand for consumer durables is more income elastic than for non-durables which are usually staple items in people’s monthly budget.

SOME KEY FINDINGS
 Asia-Pacific region is the most lucrative area for the consumer electronics industry, as most of the markets are still untapped.  MP3 players continue to drive the audio market worldwide.  Wi-Fi networking is expected to become a key enabler for the delivery and redistribution of content in homes, particularly for retail consumer electronics hardware.  Mobile camera phone market has emerged as the single largest market for image sensors, surpassing the entire consumer electronics segment, including digital still cameras worldwide.  The strongest growth in consumer electronics segment is expected to come from China by 2010, as the demand for consumer electronics is rising with the rapid pace of economic development and low cost consumer electronics manufacturing.  On the back of this strong demand, China will become the second largest market for consumer electronics, after US.

Product
Television (any model) DVD Player/Recorder Digital Camera Cell Phone Desktop Computer

Tech Enthusiasts
97 % 96 % 93 % 92 % 90 %

All Adults
98 % 84 % 62 % 76 % 66 %

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erratic supply of water and electricity in many areas. Threat of New Entrants Capital Requirements and Economies of Scale: In the case of retail stores. a high cost of capital and continuous up gradation of technical and managerial skills. 5 . the high growth rates that it promises make it a good industry to enter.Consumer Electronics Industry Analysis Porter’s Five Forces Model Although the Indian Consumer electronics market is highly competitive. Economies of scale is required in as there are large fixed costs associated with setting up a manufacturing plant as there are problems of under-developed infrastructure. there is lack of good distribution network and lack of knowledge of consumer buying patterns which calls for large investment in distribution channels and research to improve the reach.

This is mainly due to the multiple tax structure which consists of 12% VAT. which has traditionally been a very small slice of the overall manufacturing segment. • The duty structure for electronics adds up to 30% which is a significant amount. pilferage and distribution and inventory management. and even laptops. hunting for good deals. for televisions.Supply Chain Issues: The existence of too many intermediaries in the supply chain coupled with issues in logistics. 2% Central Sales Tax and Local taxes. eats away the profits of the retailer. 4% Goods and Service Tax. However. Government Policy: By encouraging manufacturing zones and improving the infrastructure. the FDI is 100% favouring foreign investors. consumers are ready to try new brands based on price for features offered and service quality or reputation of the brand. there are some policies which need to be looked at. the switching costs in mobile phones are high. For instance. the government is developing the entire manufacturing sector. While the government is trying to encourage the growth of the retail and manufacturing industries in India. Product Differentiation: Though the awareness is increasing amongst the Indian consumers. management of POS data. 6 . • The FDI policy limits to 51% stake for foreign investors. making it unattractive for new entrants. Switching costs vary amongst the electronic categories. as consumers who are used to one brand find it difficult to use another brand. retailers and manufacturers are unable to increase brand loyalty. 8% excise. which will help in boosting the electronics production in India. which forces foreign retailers to use franchise arrangements. and in the manufacturing sector. The Indian consumer is very price sensitive and hence he keeps hoping from one place to another. cameras.

Bargaining power of suppliers The biggest threat is the trend of large suppliers integrating forward as in the case of Dell. the retailers find it difficult to integrate backwards to produce their own electronic goods as in the case of private food labels. auction sites like rediff. music and book stores. However. India still offers a good chance for new entrants and hence the threat is considered to be low to moderate. Nokia. hypermarts. and declining margins and hence the bargaining power for 7 . Large chain stores like Tata Croma. can easily compare prices and go for the best deals in town. poor distribution.com. the buyers have moderate to high power in the consumer electronics industry. there are a large number of suppliers in the market who face overcapacities. • Red tapes and bribery in the Indian government system is also a stumbling block for new retailers or manufacturers. Taking into consideration the positives and negatives. Considering the market dynamics and the size of the market.• Existence of the grey market due to poor government regulations to keep counterfeits at bay coupled with the lack of consumer knowledge and legal recourse encourages manufacturers to churn out spurious products which can lead to lost sales of the tune of 10-15%. Though the better brands can command a higher price. E-Zone have distinct advantage over the smaller stand alone stores as they can demand good discounts suppliers. in the Indian electronic context. by setting up their own retail outlets. the general consumer (buyers) who usually purchase electronic goods from electronic retailers. service quality and product features and hence commands a moderate to high power in this industry. large duties. Apple. As brands play an important role in the electronics market. buyers are constantly comparing prices. Bargaining Power of Buyers With the emergence of new channels like the internet.

but as they are part of big Indian business groups. Though factors such as high transport and storage costs. the fact that the market is only at the nascent stage with promises of high growth rates of 16% coupled with the diverse needs of customer groups. like Nokia in the south. large investments. they have a lot of muscle power and hence the intensity of rivalry can be placed at a mid level. With more companies setting up the manufacturing plants in India. the bargaining power of suppliers is definitely low to medium. the existing players seem to be enjoying a relatively low rivalry.suppliers is less and competitive pricing comes into play. 8 . Product differentiation is more and more difficult in the consumer electronics industry and the existence of cheap Chinese suppliers also adds woes to the suppliers. The incorporation of camera in the mobile phones is definitely a threat to the camera market. the manufacturers and retailers need to understand the consumer needs. Intensity of Rivalry amongst existing players There are few key players in the consumer electronic market. and low switching costs tend to intensify the rivalry. Threat of Substitutes The threat of substitutes for the manufacturers of these electronic goods is medium to high unlike the case of white goods. For instance the VCR was replaced by the DVD player which will soon be replaced by a Blue Ray Player. and an untapped rural market. Hence product innovations in this segment are very high and players in this industry need to mindful of this. As new technology enters the market at increasing pace. lack of differentiation.

e. internal triggers. Marketers are particularly good at this through advertising. such as hunger or thirst. which are available to buyers.  HOW CONSUMERS BUY 1. It may happen that after a trip to the market. consumer’s perceived actual condition) and wants to improve his/her situation (i.e.g.. seeks buyers and tries to please them. and thus there arises a deviation from the budgeted items and expenditure. may tell the consumer that food or drink is needed. which are not in the budget. Need/Want/Desire is Recognized In the first step the consumer has determined that for some reason he/she is not satisfied (i. For instance. they might have purchased some items. External factors can also trigger consumer’s needs. In order to be successful.. Therefore a seller most of his time. who make decision to buy products. 9 . a seller is concerned with.CONSUMER BUYING BEHAVIOUR  WHAT IS BUYER BEHAVIOUR? The wealth of products and services produced in a country make our economy strong. have a number of alternative suppliers: substitute products are available to consumers. all the behaviour of human beings during the purchase may be termed as “buyer behaviour”. perfume counters). • • • • • • Who is the customer? What do consumers buy? When do consumers buy? How do consumers buy? From where do consumers buy? Why do consumers buy? A buyer makes a purchase of a particular product or a particular brand and this can be termed “ product buying motives” and the reason behind the purchase from a particular seller is “ patronage motives” When a person gets his pay packet. and if he is educated . consumer’s perceived desired condition).. by appropriating the amount to different needs.sits down along with his wife and prepares a family budget. instore displays and even the intentional use of scent (e. Almost all the products.

At level one the consumer may create a set of possible solutions to their needs (i..g. this may change when it is actually time to make the purchase.. Search for Information Assuming consumers are motivated to satisfy his or her need.. they will next undertake a search for information on possible solutions.). and the amount of time available to search. memory) or the consumer may expend considerable effort to locate information from outside sources (e.g.g. Internet search.e. Such evaluations are more likely to occur in cases of expensive or highly important purchases. product types) while at level two the consumer may be evaluating particular products (i. To help ease the concerns consumers have with their purchase evaluation.. After-Purchase Evaluation Once the consumer has made the purchase they are faced with an evaluation of the decision. talk with others. The sources used to acquire this information may be as simple as remembering information from past experience (i. Customer service centers and follow-up market research are useful tools in helping to address purchasers’ concerns.. etc. friend is critical of purchase). marketers need to be receptive and even encourage consumer contact. the customer lacks the necessary funds (e.g. The “intended” purchase may be altered at the time of purchase for many reasons such as: the product is out-of-stock.e.. Evaluate Options Consumers’ search efforts may result in a set of options from which a choice can be made. 4. or members of the consumer’s reference group take a negative view of the purchase (e.2. which at its extreme may result in the consumer returning the product while in less extreme situations the consumer will retain the purchased item but may take a negative view of the product. a consumer who needs to replace a television has multiple solutions to choose from such as plasma. a competitor offers an incentive at the pointof-purchase (e. store salesperson mentions a competitor’s offer).e. However. It should be noted that there may be two levels to this stage. 3. 5. brands) within each solution.  Why Consumers Buy : 10 . familiarity with available solutions. If the product performs below the consumer’s expectation then he/she will reevaluate satisfaction with the decision.. How much effort the consumer directs toward searching depends on such factors as: the importance of satisfying the need. LCD and CRT television. For example. Purchase In many cases the solution chosen by the consumer is the same as the product whose evaluation is the highest. credit card not working).

In fact. in many countries where the standard of living is very high.g.. food. 11 . It probably makes more sense to classify needs that are not a necessity as wants or desires.Customers make purchases in order to satisfy needs. Some of these needs are basic and must be filled by everyone on the planet (e. in planning for a family vacation the mother may make the hotel reservations but others in the family may have input on the hotel choice. a father may purchase snacks at the grocery store but his young child may be the one who selected it from the store shelf. So understanding consumer purchase behavior involves not only understanding how decisions are made but also understanding the dynamics that influence purchases. For example. shelter) while others are not required for basic survival and vary depending on the person. a large portion of the population’s income is spent on wants and desires rather than on basic needs. Similarly.

In general.. than to be able to decide is quoted to be the words of Napoleon. Minor Re-Purchase – these are the most routine of all purchases and often the consumer returns to purchase the same product without giving much thought to other product options (i. Other decisions are fairly routine and require little effort.e.. For marketers it is important to understand how consumers treat the purchase decisions they face. The implication of buying behavior for marketers is that different buying situations require different marketing efforts  Consumer Buying Decision Process “Nothing is more difficult and therefore.TYPES OF CONSUMER PURCHASE BEHAVIOUR Consumers are faced with purchase decisions nearly every day.. status within a group). the same company may face both situations at the same time. while other customers see the purchase as routine.. Major Re-Purchase .e. The consumer’s lack of confidence in making this type of decision often (but not always) requires the consumer to engage in an extensive decision-making process. more precious. Major New Purchase). consumers face four types of purchase decisions: • • • • Minor New Purchase – these purchases represent something new to a consumer but in the customer’s mind is not a very important purchase in terms of need. their marketing strategy may vary greatly from a company targeting customers who view the purchase decision as routine. This is amply true in the case of consumer too. But not all decisions are treated the same. money or other reason (e. Major New Purchase – these purchases are the most difficult of all purchases because the product being purchased is important to the consumer but the consumer has little or no previous experience making these decisions. If a company is targeting customers who feel a purchase decision is difficult (i. consumer is brand loyalty).g. It is for this reason that the marketers are bound to have a full knowledge of the consumer – buying decision process.these purchase decisions are also important to the consumer but the consumer feels confident in making these decisions since they have previous experience purchasing the product. In fact. Some decisions are more complex than others and thus require more effort by the consumer. The individual consumer may 12 . However it should be remembered that the actual act of purchasing is only one stage in the process and the process is initiated at the several stages prior to the actual purchase. for some the product is new. not all decision processes lead to purchase. Secondly even though we find that purchase is one of the final links in the chain of process.

Also they look out for the width and depth of the range they purchase and conduct their annual shopping at one shot. Persons engaged in extensive decision making usually employ all stages of this decision process. the process itself and the factors affecting the process. Where as those engaged in limited decisions making and routine response behaviour may omit some stages. Cultural factors Influencing Consumer Behaviour 13 . Image Shoppers are fashion. Accordingly the survey classifies customers in to the four segments namely • • • • Convenience Shoppers Value Shoppers Image Shoppers Experience Shoppers Convenience shoppers for instance .terminate the process during any stage. Experience Shoppers are attentive and prefer personalized services look out for the right ambience. A survey conducted by the marketing team of shoppers stop Ltd. Finally not all consumer decisions always include all stages. Prefer quality reassurance and benchmark offerings among other related attributes. Reveals the psychography of the modern shopper. and prefer not to buy at one sold.conscious and look out for the latest trends and labels.are people who consume relatively less amount of time while shopping. Value Shoppers always hunt for value for money . On the other hand . The consumer decision process is composed of two parts. prefer giving personal advice on clothing at the time of purchase .

Even in a house the male head is the final decision maker. Product (colour. A good example would be Philips audio systems. and shape) There are many examples that support this point. 3. Villagers used to buy one Lifebuoy cake and cut it into smaller bars. Land. Social practices There are so many different cultures. Changes in saving and investment patterns From Gold. This helped lifebuoy to introduce smaller 75-gram soap bars. 2. Decision-making by male head The male in Indian culture has always been given the designation of key decision maker. However. In rural areas. VCR‟s. That is the main reason for the large acceptance of big audio systems. LCD TV‟s etc. is shared with the rest of the village.Cultures. For example. Thus Philips makes audio systems. in rural India. the viewpoint is totally opposite. For example. 14 . which only goes on to make the marketer's job tougher. Urban India looks at technology with the viewpoint of „the smaller the better‟. in most cases. and each culture exhibits different social practices. size. design. the Mukhiya‟s opinion (Head of the village). which are big in size and get accepted in rural India by their sheer size. in a few villages they have common bath areas. to Tractors. which could be used individually. this trend is very prominent. 4. Some of the few cultural factors that influence buyer behaviour are: 1.

Possession 9. Fashion 8. Vanity 4. THE IMPORTANT MOTIVES. Since then a considerable research on the marketing implications of the process has been developed and tested the applications of many elements of marketing. : Imitation motives : Old people dress like young ones. 6. you may purchase a burglar alarm(out of fear) 2. coins etc.if effectively used. Marketing strategies. Sex and romance 7. Health and Physical : Spending much on dresses. pressure cookers etc 15 Well being 10. Comfort and Convenience . ornaments etc. Engel KollatBlackwell and Nicosia. vitamins etc. Love and affection : When you purchase toys. it is out of affections. dresses for your sister. INFLUENCING THE ULTIMATE BUYING BEHAVIOUR OF CUSTOMERS. : This refers to collection of stamps. The three leading theorists were Howard-sheth . 1. Many of the marketing strategies and tactics will have to be developed in relation to consumer attitudes. Desire for money 3. Fear : To overcome theft. :Purchasing health foods. : Getting costly items to be admired by others : Possessing luxurious items for high position in the society 5.MARKETING IMPLICATIONS OF CONSUMER’S DECISION PROCESS It was during 1960’s that a number of theories to explain the consumer ‘s decision process started appearing. will go a long way in initiating and developing consumer attitudes in favour of the products. Pride : Purchasing when the price falls down. :Purchasing equipments like refrigerator.

Consumer Electronics Market        Rapid Innovation Dynamic Market Place Highly Competitive Industry Significant Time-To-Market Pressures Significant Cost Pressures Rapid Rates of Market Penetration Rapid Transition from One Technology to another 16 .

3. bonds.ECONOMIC FACTOR AFFECT THE BUYER’S BEHAVIOUR 1. higher the sales. 6. Higher the promotional expenses. Consumer Credit : “ Buy now and pay later” plays its role effectively in the rapid growth of markets for car. lower the sales of this product Higher the real income. Income expectations : The expected income to receive in future has a direct relation with the buying behaviour. 4. 5. bank balances etc. The change in income has a direct relation on buying habits. scooter.. If the buyers give importance to present needs. Disposal personal income represents potential purchasing power that a buyer has. furniture and the like. in comparison. And buyers spend less if they give importance to future needs.. radio. higher the sales of the product. Generally large family spend more and short family spend less. cash and assets readily convertible into cash.Size of family income : The size of family and size of family income affect the spending and saving patterns. 17 . e.Propensity to consume and to save : This goes to the habit of spending or saving with the disposal income of buyers. The expectation of higher or lower income has a direct effect on spending plans. Lower the price of substitute products.g. Economic model suggests behavioural hypothesis : • • • • Lower the price of the product.e. Liquidity of Fund : The present buying plans are influenced greatly by liquidity of assets i. higher the sales. Disposal personal income : The economists made attempts to establish a relationship between income and spending. then they dispose of their income. 2.

family. demographics. personality. and feelings. Locality. and market mix factors. beliefs. reference groups. social class. 18 . knowledge. motivation. royalty.  EXTERNAL INFLUENCES OF BUYERS • • • • • • • • • • culture. attitudes. lifestyle. sub-culture. INTERNAL INFLUENCES OF BUYERS • • • • • • psychographics (lifestyle). Consumer behaviour concern with consumer need consumer actions in the direction of satisfying needs leads to his behaviour of every individual depend on thinking process. ethnicity.

Black box model ENVIRONMENTAL FACTORS Marketing Environmental Stimuli Stimuli Product Economic Price Technological Place Political Promotion Cultural Demographic Natural BUYER'S BLACK BOX Buyer Characteristics Attitudes Motivation Perceptions Personality Lifestyle Knowledge BUYER'S RESPONSE Decision Process Problem Product choice recognition Brand choice Information Dealer choice search Purchase Alternative timing evaluation Purchase Purchase amount decision Post-purchase behaviour The black box model shows the interaction of stimuli. whereas the environmental stimuli are given by social factors. political and cultural circumstances of a society. SOME KEY STATISTICS 19 . decision process and consumer responses. where the focus is not set on the processes inside a consumer. based on the economical. The buyer’s black box contains the buyer characteristics and the decision process. The black box model considers the buyers response as a result of a conscious. rational decision process. However.The black box model is related to the black box theory of behaviourism. in which it is assumed that the buyer has recognized the problem. but the relation between the stimuli and the response of the consumer. consumer characteristics. in reality many decisions are not made in awareness of a determined problem by the consumer. The marketing stimuli are planned and processed by the companies. which determines the buyer’s response. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people).

BUYING BEHAVIOR OF CONSUMER ELECTRONICS 20 .

current product diffusion.  Consumer age. and photo printers. and lifecycle stage of a product must be viewed in concert with price to understand purchase process behavior. brand. DVRs. it has become a symbol of status and ‘cool’ and hence become a must-have to fit in with the popular group  GLOBAL CONSUMER BEHAVIOUR Changing Trends In Women 21 .  Endorsed by opinion leaders – excellent reviews in magazines. on blogs. highdefinition DVD players. including game consoles. Price is a significant influence on purchase behavior but is not always the most important factor. type of product. TV shows. by word of mouth by existing consumers. etc  High on quality – brand name of apple assures on quality. buyers of certain products. are more likely to consider product features and capabilities over price.  For example. especially sound and music clarity as well as product durability Associated with the ‘aspirational group’ for a consumer – with a trend setting product like an iPod.

with market revenues of $21.  But the CEA study indicated that women are more open to advice. reliability and simplicity.6 billion in 2007. CONSUMER APPLIANCES & ELECTRONICS RETAILING IN CHINA 22 . the study indicated. with a CAGR of 6. and in the way that they shop for these products. and have a major influence on technology purchases for the household. TOP 5 EMERGING NATIONS  BRAZIL  CHINA  INDIA  MEXICO  SOUTH AFRICA The Top 5 Emerging countries contributed $37. China is the leading country among the Top 5 emerging nations. are heavy users of CE products.6 billion to the global consumer electronics industry in 2007. functionality.4% over the 2007-2012 period. the market is forecast to have a value of $51.9% between 2003 and 2007 In 2012.  Women are less enamoured of gadgets and technology for its own sake.  Female customers are distinct in their beliefs about technology. and when shopping they focus on portability. A Consumer Electronics Association (CEA) study has found that women are more comfortable with technology than ever before. in what they desire from consumer electronics.2 billion. with a CAGR of 10.

the available market was shrinking.472.  Official estimates for the CNY(Chinese New Year 2009) period show sales of household electric appliances grew by 17.661) (2008 est.391)  15-64 years: 71.7 -- Source: National Bureau of Statistics of China.030)  65 years and over: 8% (male 50.378/female 465. Consumer Durables Washing Machine Refrigerator Colour Television Camera Mobile Phones Automobiles Number per 100 Urban Households 95.3 17.513.9% (male 491.  Presence of Rural rebate scheme for reduced price goods to rural consumers has made the available market a lot bigger though.300.7 34. The world’s fastest growing large economy.652.2 133.9 90.1 3.8 75.) 23 .4 2.665/female 125. CHINA DEMOGRAPHICS  0-14 years: 20. margins very tight and.480/female 55. and foreign investors and market  High Competitive market. over the past few years.1% (male 142. China Statistical Yearbook 2005 NOTE: China Statistical Yearbook 2005 is not available.8% over the same period in 2008.4 47.085.2 Number per 100 Rural Households 37. until recently.020.0 111.

and limit product features and services 24 . reduce consumer choice. including industryled standards. expanded consumer choice. market-oriented programs and initiatives. and enhanced product functionality  Oppose government-imposed approaches that stifle innovation. which highlight and sustain energy efficiency in the electronics industry  Continue to work cooperatively with governments in the development of energy efficiency initiatives that complement and support voluntary approaches and continued innovation.GLOBAL INDUSTRY POSITION  Support voluntary.

Volume sales of washing machine will be driven by growth in fully automatic category during 2008-09 to 2011-12. changing lifestyle and rapid urbanization. The market for televisions in India is changing rapidly from the conventional CRT technology to Flat Panel Display Televisions (FPTV).to 3-megapixel cameras. demand for MP3 players and digital video appliances are anticipated to surge at double-digit rate in near future. The AC market in India is projected to grow at 30% to 35% for the coming few years. Currently. and the share of FPTV is projected to increase at robust rate in near future.  TRENDS IN TERMS OF TECHNOLOGY AND PRODUCTS – INDIA  Lower duties. no frills. certainly growing at a much faster pace than the direct-cool category. the split between CRT and FPTV is around 97% and 3% respectively. from conventional CRT to flat-screen or plasma/LCD TVs. the Indian consumer electronics industry is forecasted to grow at a rapid rate of 10% to 12% in the coming few years. etc  Huge boom in mobile phone purchases with high penetration even in rural markets (launch of value for money.Trends in Electronics Market Propelled by growing middle class population. The low penetration level of consumer electronics goods coupled with increasing preference for comfort and luxurious goods are widely attracting the foreign as well as domestic players to the industry.to 17-inch computer monitors. are anticipated to drive the Indian refrigerators market over the forecast period. Driven by young population. from 1. from 15. from monochrome to colour phones. Frost-free refrigerator sales. reliance phones gave an impetus to rural penetration) 25 . cheaper technology and strong competition with low entry barriers ensure competitive prices  Increase in brand and product choice  Value-for-money pricing lead consumers to upgrade – from corded to cord-less phones.

 With internet penetration also increasing along with growing number of service providers. competitive prices and wide choice. looks.  CONSUMER BEHAVIOUR TRENDS  Shift from buying predominately during Diwali and other festive seasons to year round purchasing  Consumers more aware of brands  Consumers more conscious of style. routers and accessories has gone up. technical specifications  More research is done on technically advanced gadgets. 26 . the sales of modems. but there has also been an increase in impulse buying with increasing disposable incomes.

Television. Washing Machine Television Television Refrigerators. Refrigerator Vacuum Cleaner. Air Conditioners Refrigerators. Air Conditioners Refrigerators. Washing Machines. Mobile Phones Vacuum Cleaner Television. Electric Fan Mobile Phones 27 . Refrigerator. Air Conditioner. Refrigerator.KEY PLAYERS IN ELECTRONICS AROUND THE WORLD COMPANIES Videocon Industries Godrej Whirlpool India Mirc Electronics Panasonic Voltas BPL Limited Electrolux Samsung Hoover LG Electronics Eureka Forbes Sony Blue Star Bajaj Electronics Nokia PRODUCTS Refrigerators. Television Vacuum Cleaner. Television. Television. Mobile Phones Vacuum Cleaner Washing Machine. Mobile Phones. Microwave Ovens Refrigerators. DVD Players Air Conditioners Geysers.

Allwyn. dethroning the Indian players and dominating the market  Consumer durables sector is one of the fastest growing industries in India  LG and Samsung. the two Korean companies have been maintaining the lead in the industry with LG being the leader in almost all the categories  The rural market is growing faster than the urban markets but penetration level is very low  CTV segment is expected to the largest contributing segment to the overall growth of the industry  The rising income levels. Kelvinator. and Voltas  Post-liberalization many foreign companies have entered into India. double-income families and increasing consumer awareness are the main growth drivers of this industry Consumer Electronics in India 28 .OVERVIEW OF INDIAN MARKET  Pre liberalization dominated by a few domestic players like Godrej.

This analytical research evaluates the Indian consumer electronics industry. underlining the future potential areas and key issues crucial for the industry development. The industry has been witnessing significant growth in recent years due to several factors. like refrigerators. microwave and washing machines have low penetration in the country.India has an increasingly affluent middle class population that. It provides an insight into the emerging and potential future trend in all the categories and highlights the key strategies that need to be worked upon to get success in the highly competitive industry. The report finds that since the penetration of several products like TVs and refrigerators are reaching saturation in the urban areas. has made the country’s consumer electronics industry highly dynamic. offering 4year industry forecast. the consumer electronics goods. The report thoroughly analyzes the historic performance and future prospects. But still. growing disposable income and availability of easy finance schemes. representing vast room for future growth. on the back of rapid economic growth. of following consumer electronics products: • • • • • • • • • • Washing Machines (Semi-automatic & Fully Automatic) Television Set-top Box Refrigerator (Frost-free & Direct Cool) Air Conditioner Microwave Oven MP3 Players Digital Camera & Camcorder Mobile Handsets PCs (Desktop & Notebook) Different Segments of Indian Consumer The Socialites 29 . It briefly discusses about the current and emerging trends in the industry. the markets for these products are shifting to the semi urban and rural areas. such as retail boom.

exclusive products. if not better. she is rubbing shoulders with men. They look for durability and functionality but at the same time is also image conscious. based on the coming of age of liberalization children. They prefer to shop in specialty stores. Today. cautious in their approach towards purchase. Socialites are also very branding conscious and would go only for the best known in the market.Socialites belong to the upper class. They are traditional in their outlook. The working woman today has grown out of her long-standing image of being the homemaker. The Working Women The working woman segment is the one. they seek a lot of information before making any purchase. The Youth The “rise of next generation” has been written about with unbridled optimism and enthusiasm. This segment has opened the floodgates for the Indian retailers. The Conservatives The Conservatives belong to the middle class. They go for high value. The conservative segment is the reflection of the true Indian culture. which has seen a tremendous growth in the late nineties. They are always looking for something different. go to clubs on weekends. Working women have their own mind in decision to purchase the products that appeal to them. They are global in their worldwide view and have been exposed to enormous information unlike their parents. proving herself to be equally good. spend more time with family than in partying and focus more on savings than spending. Slow in decision making. 30 . and spend a good amount on luxury goods.

raised amidst a consumption-friendly and consumption encouraging social discourse. as well as yield the demographic dividend that will drive economic growth 31 . They are expected to be at the forefront of creating a new. modern. west-embracing consumer society.

Revolution in Indian Consumer Behaviour • Rising disposables incomes(higher buying power) Male no longer the sole income generator Enjoys travelling. shopping and eating out Increased indulgence in entertainment and lifestyle products • • • • Pester power. Seeking variety • Seeking value for money(High quality and price consciousness) • Technology Savvy (Internet. Voice Recognition…) Getting used to speed of service Convenience seekers • • 32 . Mobiles.

Laptops 3. Henceforth in this paper consumer electronics will refer to Brown Goods. Computing Devices: Computers. Televisions. etc 4. ‘Traditional’ Consumer Electronics: audio and video equipment 2. music players. the emergence of telecommunication has lead to the convergence of mobile technology into the consumer electronics industry and hence this paper will only deal with traditional consumer electronics. mobile phones and computing devices which can be termed as Brown Goods as per industry definitions. PCs. Brown Goods Industry in India Out of the electronics industry in India. audio. 33 . laptops. cameras. electric toothbrushes. Calculators. shavers. the consumer electronics segment is one of the biggest markets. In addition to this. White Goods: Household /Domestic Appliances such as washing machines.Segment Definition In general consumer electronics refers to a variety of electronic equipment used by private customers. digital players. vacuum cleaners. grinders. irons. computing devices. mobile handsets and accessories. Personal Care: Hair Dryers. gaming consoles commonly fall into the consumer electronic category. The consumer electronics industry comprises of communication devices. video and gaming products. This industry can be divided into many segments: 1.

the major ones including • Rising disposable incomes coupled with increasing consumer exposure • Increase in manufacturing in the local grounds • Credit/Financing schemes which make purchase easy • Growing competition .Consumer E In 2008. leading to better deals • Increased reach due to better distribution networks 33% 34 . the consumer electronic Industry is all geared up for fast growth in the coming years. the market size was estimated to be $22 billion and growing. The predicted figure for the consumer electronic market by 2013 is around $46 billion. This astounding growth is due to many factors. With the growing population in India. growing at a compound annual growth rate (CAGR) of 16%. exceeding 1 billion.

the sales went up from $5. Common Wealth Games 2010 are all helping in boosting the drive for upgrades. video and gaming devices take up close to one – third of the wallet share in the consumer electronics segment. The main product in this group is Television. With the telecommunication boom and lower call rates. Mobile Handsets The largest chunk of the consumer electronic market goes to the mobile handsets and accessories with 37% of Indian spending in 2008. Video and Gaming Devices The audio. It’s very interesting to note that the current PC penetration is only 2% and this leads to excellent growth opportunities with a predicted CAGR of 13% for the period 2009 to 2013. desktops and accessories) market took up a share of 33% of the consumer electronics wallet in 2008. the computers (laptops. The mobile penetration in the rural market is 15% and is the most as compared to other categories. with new technology such as Plasma TVs entering the market and cricket being the main attraction for most Indians. In the future. we can broadly classify them as: Computers According to Business Monitor India Report. the Indian Premier League. most vendors will definitely target the 3 tier cities and rural customers Existing Players in the Indian Market 35 .Taking a look at the individual segments in the consumer electronics segment.8bn in 2008 to $6. It also states that with the prices of PCs coming down by nearly half. Audio.0bn in 2009. the handset market is poised to grow at 19% compounded annually and reach a staggering figure of about 380 million units by 2013. This segment is set to grow at 22% CAGR from 2009 reaching US $15 in 2013.

The upcoming players are D-Link. It is proud of their distribution channels which offer its products to the breadth and length of India. Bose India. Videocon boasts of an annual turnover of the tune of US$4. As early as 1998.Consumer Electronics Manufacturers The main electronic manufacturers in the Indian market are Videocon Industries.G Electronics The market leader in consumer durables is LG for close to a decade in India. BPL. Videocon Appliances Ltd One of India’s ingrown companies. WeP and Tyco followed by Nokia and Motorola. Panasonic India. They have also been recognised for their superior innovation and after sale service. It also has global presence. Italy . China and the Middle East. Samsung.1billion. etc. LG Electronics. with plants in Mexico. Poland. LG with a budget of Rs500 crores set up manufacturing facility with a Figure: 36 Market Share of Electronics Manufacturers Source: Centre for Monitoring Indian Economy . and is known to be the third biggest manufacturer of picture tubes in the world. It has 17 sites in India. Samtel . L. Onida.

which set up a retail outlet at Chennai. 37 . Nokia. Starting with 550 people. L. radios. This facility has an investment plan of USD100 million starting from 2007. near Chennai. Recently they opened another unit at Sriperumbudur. it has grown to a size of 8000 people today and employs 70% women. with a sprawling area of 200 acres. with humble beginnings of housing fans. incorporates the best quality. near Delhi. Chennai in 2006. 10.state-of-the art technology at Greater Noida. high quality and state of art. over a 5 year period .000 crores in 2008 Samsung Electronics Samsung entered India in 2002 with an 80 acre sprawling facility at Noida and mainly manufactures colour TVs. Its manufacturing facilities are best known for its high automation. The manufacturing facility.G also has recently entered directly into the consumer market by setting up retail shops and boast of retail sales Rs. mobile phones and some white goods. India Nokia also set up its manufacturing plant in Sriperumbudur. Consumer Electronics Retailers Viveks – The Unlimited Shop Viveks is one of South India’s oldest consumer electronic retailer founded in 1980s. just taking 5 months to complete the entire factory construction. high efficiency and a great supply chain system.

by offering the best deals and low prices and is positioned more towards the lower-middle and middle class customer segment. They have an interesting store format which consists of three dedicated zones . a giant in the organized retailing of consumer electronics. Experience Zone and Home Zone to meet the electronic needs of the entire family. NEXT Retail India Ltd has more than 300 outlets across 16 states with a presence in 145 towns spanning metros and large towns and claim to be India’s Largest Electronics Retail Chain. hosting various brands in household durables and consumer electronics. in 2007 at Lucknow. and home appliances. NEXT has more than doubled its 38 . It plans of setting up of 50 more showrooms in south India. Till 1994.000 sq. heaters and other household equipments. NEXT Retail India NEXT Retail India.75. They plan to open out 40 stores by 2010 and Croma distinguishes itself by providing one-stop shopping with customized consultation to the middle. an electronics specialty store. Woolworth for backend operations. 400 Crores and with wide product offerings.ft and boasting of a group turnover of Rs.000 sqft and had an initial investment of Rs 35 million. It strategically has an alliance with international organized retailer. was launched by Future Group. it established its dominance in the two states on Tamil Nadu and Karnataka with 51 showrooms covering a retail space over 1.fans. mixers. Ltd. irons. The company has expanded to 40 stores. all over India in about 2 years. is a subsidiary of Videocon Industries. E-Zone competes with Croma.Liberation Zone. E-Zone E-Zone. it had set up only 3 showrooms. with a strategic initiative for rapid expansion. however. which has several brands all under one roof. Today.and uppermiddle class customer segment. Infiniti Croma The Croma retail chain is owned by Infiniti Retail which is a Tata sons 100% subsidiary and set up its first store in 2006. Ltd and opened its first retail electronic store at Indore in 1999. which was 20.

These outlets cover the entire value chain in formats like stand-alone stores in Malls. Most laptop showrooms are local players or dealers for the big brands like Lenova. etc. there are speciality stores dealing only with mobile phones. currently has 300 company-owned stores across the four southern states including 70 in Andhra Pradesh. Acer. laptops and exclusive dealers for the big electronic brands. as well as Shop-in-Shop within Shopper's Stop. Lifestyle and other large-format chain stores Laptop Speciality Stores It is very interesting to note that there are very few multibrand laptop speciality retail chains in India. Cellucom. The MobileStore currently has more than 1050 outlets and plans to have a network of 2500 stores by 2010 across 650 cities. Their plans ahead are more ambitious with a targeted turnover of 1800 Crores for next year with 600 plus outlets. HP. Cellucom which hosts mobile and laptops. first outlet was opened in January 2007 at Gurgaon. and is trying to touch 400 stores by March 2010 through the franchisee mode. Key Drivers  Young Population with rising incomes 39 . UniverCell. covering virtually every major town in every state across India. Chennai-based mobile retail chain . Currently there are 120 stores across 15 cities including top four metros. etc. UniverCell. Besides these top players. Mobile Phones Speciality Retailers The main players in the mobile phone retailer market are The MobileStore.last year’s turnover in the current financial year.

etc. the Indian consumer wants the latest and the best. Now mobile phones are changed every year.  Falling Prices of Consumer Electronics 40 . People want to be trendy and are becoming gizmo frenzy. Figure 1 Share of Wallet . the discretionary expenditure is increasing. With increasing speed of innovations and as new technologies come in. the Indian consumers now have an easier access to consumer electronics  Changing Consumption Patterns Gone are the times when people bought electronics with the intension of using it for years together.Indian Consumer Trends  Availability of Easy Credit Options With all the major players offering easy EMI schemes and with the increased penetration of Credit cards.45% of the Indian population is below 25 years which accounts to close to 500 million consumers (18+) of which 230 million are in Urban India. laptops once in 2 years . With the rising incomes and education levels.

Figure 2 Retail Prices of Consumer Electronics Challenges 41 . prices are being driven even further down.With new models. Especially in the mobile phone segment. products and more competition. prices fall as much 20% after 6 months after introduction.

The role of electronic companies doesn't end on the sale of the product. consumers want some guarantee for the product that they are buying. including railway systems. power supply. Hence companies need to increase focus on product / store differentiation to address various segmental specific needs  Lack of Distribution Networks and Logistics Management Getting stock into a store in India is a massive challenge given the poor city roads and complex intra city transportation regulations . and availability of wide range of choices. They want the product that is easy-tohandle. Transportation. It is of utmost importance to design an efficient network.  Presence of Gray Market in Consumer Electronics Presence of gray market in consumer electronics products. small store backrooms owing to expensive real estate). warehouse facilities and timely distribution are other areas which need to be enhanced. Counterfeit products are present across a wide range of products. good in quality and low in price. the profitability and margins of the companies are adversely affected. consumers have become quite smart. The distribution network is also highly fragmented and is very poor in semi-urban and rural areas. highways has to meet global standards. Airport capacities. high cost of moving goods between starts. inefficient storage ( e.  Increasing Awareness of the Indian Consumers With the increase in access to Internet information. music players is definitely eating into the sales of the retailers. Most importantly. 42 .g. Price Wars With the increase in price wars due to the entry of new players in the market and increase in manufacturing capacity by some original manufacturers. but continues till the end of guarantee period. especially in DVD player.

Retailers need to spend heavily on training its sales force to match the expectations of the Indian consumers both in terms of technical knowledge and soft skills. Frequently Asked Questions by the Buyer o What are the features of the product ? 43 . Trained manpower shortage in India There is lack of talent in consumer electronics retailing.

o Is there any upgraded version of the product available ? o What is the price of the product ? o Is there any free gift or discount available with the product ? o Is there an exchange offer ? Is it on a particular product ? o What about the product warranty ? o What are the after sales services of the product ? o Is there a home delivery service ? References: • Consumer Behavior In Indian Perspective – Suja Nair – Himalaya Publishers • Consumer Behaviour – Walker 44 .

S.cci.next.in www.cromaretail. Bagavathi • http://www..R.N Pillai.• Modern marketing .co.pdf 45 .in http://www.com/definition/brown-goods.html • http://www.univercell.themobilestore.viveks.in/news/others/cut-duties-on-electronics-hardware-to-12-from30-assocham.in www. Manisha Gupta.in/pdf/surveys_reports/indias_retail_sector.businessdictionary.com www.co. Sanghamitra Sahu (May 2008) • AT Kearney Report 2009 • Indian retail: on the fast track and time for bridging capability gaps – KPMG Report • India Calling 2009 KPMG Report • • • • • • www.dare. Nirupama Soundararajan.htm • “India Consumer Electronics Report Q4 2009” By Business Monitor India • China and India’s Electrical and Electronics Industries : A Comparison of Market Structures By Koichiro Kimura • Technopak. India • “Impact of Organized Retailing on the Unorganized Sector” Mathew Joseph.com www.

com/marketing-articles/customer-buying-behaviour999729.html 46 .articlesbase.• http://www.

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