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A Research on ―Purchase Pattern of consumers for
Consumer Durables along with Preference towards Organized & Unorganized Retail Formats”
In Partial fulfillment of MBA Program of Gujarat University (Batch: 2008-2010)
Submited By Priyam Mehta (08059) Umesh Lukhi (08052)
Submitted To Prof. Praneti Shah
N R institute Of Business Management
A GRAND PROJECT REPORT ON
―Purchase Pattern of consumers for Consumer Durables along with Preference towards Organized & Unorganized Retail Formats”
IN PARTIAL FULFILLMENT OF TWO YEARS MASTER OF BUSINESS ADMINISTRATION PROGRAMME
Prof. Praneti Shah
Mehta Priyam (08059) Umesh Lukhi (08052)
N.R. Institute of Business Management
Before the liberalization of the Indian economy, only a few companies like Kelvinator, Godrej, Alwyn, and Voltas were the major players in the consumer durables market, accounting for no less than 90% of the market. Then, after the liberalization, foreign players like LG, Sony, Samsung, Whirlpool, Daewoo, and Aiwa came into the picture. Today, these players control the major share of the consumer durables market. Consumer durables market is expected to grow at 10-15% in 2007-2008. It is growing very fast because of rise in living standards, easy access to consumer finance, and wide range of choice, as many foreign players were entering in the market with the increase in income levels, easy availability of finance, increase in consumer awareness, and introduction of new models, the demand for consumer durables has increased significantly. Products like washing machines, air conditioners, microwave ovens, color televisions (C-TV) were no longer considered luxury items. However, there were still very few players in categories like vacuum cleaners, and dishwashers Consumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts, and intense competition. The market share of MNCs in consumer durables sector is 65%. MNC's major target is the growing middle class of India. MNCs offer superior technology to the Consumers whereas the Indian companies compete on the basis of firm grasp of the local market, their well acknowledged brands, and hold over wide distribution network. However, the penetration Level of the consumer durables is still low in India. Indian Consumer durables market used to be dominated by few domestic players like Godrej, Voltas, Allwyn and Kelvinator. But post liberalization many foreign companies have entered into Indian market dethroning the Indian players and dominating Indian market the major categories being CTV, REFRIGRATOR, MICROWAVE OVEN and WASHING
MACHINES. India being the second largest growing economy with huge consumer class has resulted in consumer durables as the fastest growing industries in India. LG, SAMSUNG the two Korean companies have been maintaining the lead in the market with LG being leader in almost all the categories. The rural market is growing faster than the urban market, although the penetration level is much lower .The CTV segment is expected to the largest contributing segment to the overall growth of the industry. The rising income levels double-income families and consumer awareness were the main growth drivers of the industries.
Praneti Shah.R. our Grand Project guide to have given us the opportunity to work on such a challenging project. we would like to take this opportunity to express our gratitude to all those great minds and hearts that have touched this project in the path of its success. On the onset. All the interaction with them was really a good experience and added some valuable knowledge and experience.ACKNOWLEDGEMENT We express our sincere thanks to Prof. We also thank our institute N. PRIYAM MEHTA UMESH LUKHI II . Last but not the least I would also like to thank our friends who took time off to share insights about their experiences this helped us immensely to understand the psyche of the consumer. Again we would like to earnestly thank those all people who give us their valuable time for us in questionnaire survey. We just hope that the recommendations and suggestions presented by us are considered seriously. Institute of Business Management for providing us all the necessary resources required in our study.
in research project we have selected market survey on Consumer durables. we have to do market survey for electronic products preference toward. Marketing research is having following steps Determine research design. and come with some suggestion. Identify data types and sources. Analyze and interpret the data. limitation. Prepare the research report In this report. and conclusion on the basis of marketing research work As far is summary part is concern. we have done a market research on consumer durables. III . Collect the data. Design data collection forms and questionnaires. Marketing research covers a wider range of activities. Determine sample plan and size. so we were collected primary and secondary data for research methodology and follow up with the analysis part. Consumer durable industry.EXECUTIVE SUMMARY The goal of marketing research is to provide the facts and direction that managers need to make their more important marketing decisions.
Unorganized Retail 2. 1 2 3 4 Preface Acknowledgement Executive Summary Chapter : 1 Literature Review & Research Methodology Literature Review 1.No.10 Indian Retail 2.7 Tools & Techniques of data collection 1.11 Future Scenario In Retailing 2.2 Scope of the study 1.13 Key Consumer Durables & Growth Trends CONTENT Page no.1 Research Objectives 1.6 Sampling Design 1.3 Consumer Electronics 2.4 Research Design 1.5 Data Collection 1.TABLE OF CONTENT Sr.1 Introduction 2.5 Organized vs.9 Future Trends 2.8 Regulatory Framework 2.3 Literacy Survey 1. I II III 1-5 2 4 4 4 4 5 5 5 5 5 6-24 10 11 11 12 13 15 16 17 18 18 20 21 22 .2 Industry size & Growth Trends 2.4 Evolution of organized retailing in the world 2.8 Limitation of study Chapter :2 Industry Profile 2.6 Spread of modern Retail in Developing Countries 2.7 Globalization of Retail 2.12 Recent Developments 2.
2 Sector Outlook 4.6 Chapter :3 Changing Behavior Of Consumers 3.2 SWOT Analysis Chapter : 6 Micro Level Analysis Chapter :7 Hypothesis Analysis Chapter :8 Key Findings Chapter:9 Recommendations & Suggestions Chapter:10 Conclusion Bibliography Annexure 25-42 26 26 27 27 28 29 39 43-62 44 53 59 63-72 64 70 73-100 101-104 105-107 108-109 110-111 112 114-118 7 8 9 10 11 12 13 14 15 .4 Industry Classification 3.2 Factors Affecting To the Consumer Behavior 3.3 Consumer Buying Process 3.6 Market Analysis 3.5 The Key Players & their Products 3.1 PEST Analysis 5.7 The Road Ahead Chapter :4 Major Organized & Unorganized Players 4.1 Major Players 4.1 Consumer Classes 3.3 The Threat Of Retail Chapter :5 Industry Analysis 5.
Chapter 1 Literature Review & Research Methodology 1 .
at a compound annual growth rate (CAGR) of 10 per cent.3 trillion by 2018. organized retail. West and the East in the next two years. up from 44 last year. the US$ 400 billion Indian retail sector is clocking an annual growth rate of 30 per cent. As per a study conducted by the Indian Council for Research on International Economic Relations (ICRIER). which is pegged at around US$ 8. in 2009. is expected to grow at a CAGR of 40 per cent to touch US$ 107 billion by 2013. In 2008.14 billion. The organized business is expected to be 20 per cent of the total market by then. India continues to be among the most attractive countries for global retailers. Also. With rising consumer demand and greater disposable income.5 per cent or US$ 300 million of the total retail market. India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1. As a democratic country with high growth rates. The organized retail sector. Tier II cities like 2 . A McKinsey report. estimates that the Indian consumer market is likely to grow four times by 2025. the retail sector is expected to contribute to 22 per cent of India's GDP by 2010. followed by North. consumer spending has risen sharply as the youth population (more than 33 percent of the country is below the age of 15) has seen a significant increase in its disposable income. has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's eighth annual Global Retail Development Index (GRDI). CB Richard Ellis' findings state that India's retail market has moved up to the 39th most preferred retail destination in the world in 2009.Literature review: The Indian retail market. It is projected to grow to US$ 700 billion by 2010. according to a report by global consultancy Northbridge Capital. Consumer spending rose an impressive 75 per cent in the past four years alone. Foreign direct investment (FDI) inflows as on September 2009. is all set to witness maximum number of large format malls and branded retail stores in South India.43 million. in single-brand retail trading. 'The rise of Indian Consumer Market'. which currently accounts for around 5 per cent of the Indian retail market. which is the fifth largest retail destination globally. according to the Department of Industrial Policy and Promotion (DIPP). the share of organized retail was 7. stood at approximately US$ 47. Commercial real estate services company.
400.26 billion in the next four to five years. This could go further up to US$ 1. UK garment chain Topshop. part of the Dubai-based US$ 1. Retail chain Suvidhaa Infoserve plans to open 1.000 strong network in the next two to three years. Kochi and Gurgaon. Reliance Footprint. cosmetics and footwear.Noida.200 new outlets every month across the country and is eyeing a 100. which would include women and children's wear. plans to have over 50 stores across India by 2012–13. British retail major Marks & Spencer (M&S) is looking at scaling up its India operations and plans to open at least 50 more outlets in the country over the next few years. At present. Further. Amritsar. Koutons Retail India plans to open 200 stores in FY11 in addition to its existing 1.000-1. Lifestyle International. at a CAGR of 40 per cent. Australia's Retail Food Group is planning to enter the Indian market in 2010. sales of listed retailers increased by 12 per cent in the September 2009 quarter compared with the same period in 2008. Of the 200 stores. It currently has 16 outlets.000 convenient neighbourhood stores called 'Suvidhaa Point' across the country in over 20 states and over 400 cities. the Marc Ecko clothing line promoted by the US entrepreneur of the same name and the Japanese casual wear brand Uniqlo are preparing to open outlets in India.2 million in retail technology service solutions in the current financial year. besides 15 Home Centres that sell home furnishing goods. the Mumbai-based firm has 18. 3 . 100 would be family concept stores. It has ambitious investment plans which aim to clock revenue of US$ 87 million from the country within five years from start of operations. the fashion label owned by Inditex SA of Spain.5 billion Landmark Group. this sector is expected to invest around US$ 503. These will include 35 Lifestyle stores for retailing apparel. Moreover. part of Reliance Retail. Buoyed by improved consumer spending.62 million to add 100 outlets across the country in two years to sell branded footwear. many new apparel brands such as Zara. plans to spend US$ 86. are emerging as the favored destinations for the retail sector with their huge growth potential.
4 Data Collection Sources: . The research was aimed at studying the purchase pattern of consumers for consumer durable. secondary data was also required. Big Bazaar.Secondary Data: Information regarding the project. brand preference and preference towards organized and unorganized formats to purchase the same. into a separate subsidiary. Pantaloon Retail India (PRIL) is planning to invest US$ 77.Wills Lifestyle plans to expand its operations by opening 100 new stores in the next three years. which may eventually go for an initial public offer (IPO). Source: IBEF.4 million sq ft retail space at its existing operations.2 Scope of the study: The research is conducted in ahmedabad city to study purchase pattern of consumer durables which includes major factors affecting the decision. newspapers. increasing its total network to 275 stores. PRIL proposes to open 155 Big Bazaar stores by 2014.1 Objectives: To study the factors affecting purchase of consumer durables To study brand preference of consumers for consumer durable goods To study brand preference of consumers towards organized & unorganized outlet for the consumer durable goods.org 1.88 million this fiscal to add up to 2. It also plans to concentrate on online buyers. 1. 3 Research design: Research design is descriptive in nature. 1. Pantaloon Retail is also looking to hive off its value retail chain. 1. and websites which qualified as reliable. Preference of people is analyzed and quantified to know the factors responsible for their preference. Further preference is quantified in terms of organized and unorganized retail formats. These data were collected from various past studies and other sources like magazines. 4 .
7 Contribution of the study The study reveals preferential criteria for the purchase of consumer durables. it also gives insights into the preference towards organized and unorganized store along with reasons which may become helpful to the marketers to redesign strategies 1. the quality of findings may get affected.Primary Data: These data was collected through survey of consumers with the help of questionnaire. .5 Sampling plan: Target population: Households of Ahmedabad Sampling unit: households & People purchasing consumer durables from stores at the time of research Sampling method: convenience and Step out sampling Sample size: 200 1. thus the findings from the same may not be representative of the actual population.8 Limitation of the Study: As the time given to complete the project is lesser than actual time required completing similar studies. 5 .6 Analytical tools: Graphical presentation Hypothesis Weighted average 1.Research instrument: Structured questionnaire 1. The sample size s 200 (hundred).
Chapter 2 Industry Profile 6 .
emergence of new companies (especially MNCs). Most of the segments in this sector are characterized by intense competition. Most consumer goods are durables to some degree. changing lifestyles. and introduction of state-of-the-art models. There will also absolute reduction in the number of households in the low incomes. the concept has melted down to the masses and has become a part of the household‘s necessities even in the lower-middle class and rural part of the countries. the PCI is low at $370. which yield services or utility over time rather than being completely used up at the moment of consumption can be termed as the consumer durables. price discounts and exchange schemes. VCRs/VCPs and audio systems) and consumer appliances (also known as white goods) like refrigerators. In India. washing machines. Despite of that MNCs are entering in to Indian market because growing Indian middle class of around 250 millions. though it is equivalent to $600 on PPP (Purchasing Power Parity) basis and expected to see a consistent growth of over 6% over the next years to come. air conditioners (ACs). Consumer durable industry was once considered to be luxury item with targeting the upper-middle class for consumption. the number of households in the higher and middleincome categories will rise rapidly. technologically sophisticated goods ‗consumer durables‘ such as the examples given above which implies high involvement at the time of purchase. This will lift large number of households to income levels at 7 . With increasing competition. According to NCEAR survey estimates. The consumer durables segment can be segregated into consumer electronics (TVs. Also it is widely accepted that consumer durable penetration increases rapidly after per capita income (PCI) crosses a threshold limit of $2000. audio-video systems etc. TV sets. motorcars. microwave ovens. increasing consumer awareness and the introduction of new models by the Indian as well as multinational companies. Over the years demand for consumer durables has increased with the rising level of incomes. price wars. and the term is often used in a more restricted sense to denote relatively expensive. vacuum cleaners and dishwashers. branding and promotional strategies.Definition of the Consumer Durable Industry: Consumer goods like washing machines. double income families. availability of credit.
which they can become purchasers of consumer durable products. there will be a perceptible shift towards branded products and secondly. As per the National Sample Survey Organization report of "Use of durable goods by Indian households". Refrigerators. 250 m). 15500 crore consumer durables industry consists of Colour Televisions. NCAER estimates point to the fact that the number of households with monthly incomes above Rs 10.2 million in 200506. In the future.89 in 1987-88 to Rs148. Black and White Televisions. Vacuum Cleaners. Microwave Ovens. This market is characterized with low penetration levels.7 million in 1995-96 to a huge 57. 8 . Size of The Market: The total Rs. The Indian middle class market of 250 million is the biggest attraction for the MNCs along with the level of the penetration of consumer durables in the India has more attracted Multinationals to the India. Washing Machines. the per capita total expenditure on durable goods increased from Rs112. The biggest attraction for MNCs is the growing Indian middle class (approx. Similarly. This will mean that firstly. any reduction in the duties will leads to lower down of the values and this will bring more customers for the durable products. while domestic companies compete on the basis of their well-acknowledged brands. Audio Systems. earnings will be driven by rising demand for consumer durables in general.000 in non-metros is expected to rise from 22. The table below shows the ‗Estimated industry size‘ and the competition in the various segments.02 in 1993-94. MNCs hold an edge over their Indian counterparts in terms of superior technology combined with a steady flow of capital. Continuous economic growth and higher income levels will drive growth in volumes. an extensive distribution network and an insight in local market conditions. Electronic Appliances and Water Purifiers. in the case of consumer durables penetration levels of TV is believed to the highest.000 in metros and Rs 5. the level of aspiration buying will increase. and after that the penetration of the refrigerator comes. Air-conditioners.
The technology used by the company viz. The capability of the company to service its products. The brand image of the product as perceived by the consumer. The discount schemes and consumer finance facility available. Electronic Appliances and Water Purifiers (Source: BPL annual report 2000-01) 550 1000 6500 1250 3700 1500 1000 1000 9100 500 5460 3200 2100 2000 2000-01 2006-07 Now considering consumer durables industry in general. The competition is dependent upon the brand strength and distribution network. The financial strength of the players. The market positioning of the product. the advertising and marketing expenses play a vital role in competition. The advertising and marketing strategy adopted by the players in the industry. The ability of the company to introduce newer products and newer product features. the drivers that will leads to the growth of the industry in general will be: The degree of distribution network in the market.) Segment (E) Color Television B&W Television Refrigerators Washing Machines Air-Conditioners Audio Systems Microwave Ovens. the advertising and marketing costs as a percentage of operating income 9 .Estimated industry size: (Figures are in crore Rs. The competition in the industry has intensified after the liberalization and more and more MNC are coming to India to target the huge middle class of the country. Vacuum Cleaners. As a result of the increased competitive activity. state-of-the art technology or and older version. The cost competitiveness and pricing strategy of the company. In other words.
10 . air conditioners and washing machines. 2. refrigerators. Because of this. Videocon and Electrolux are acting as OEM manufacturers for manufacturing refrigerators of Samsung and LG. the export prospects are least or minimal because indigenous manufacturers do not possess adequate brand equity or excellent product quality. Instruments such as cell phones and kitchen appliances like microwave ovens were also included in this category.1 Introduction: The Consumer Durables industry consists of durable goods and appliances for domestic use such as televisions. Changes In The Strategies: There is a shift in trend as the emphasis has moved from the manufacturing process to marketing and advertising strategies.7 percentage in 2000.6% in 1993 to around 7% in 2000. most of the manufacturers like. The advertising expenses of the companies operating in this segment are going high every year and the returns are diminishing still the brand will play a major role in selling of the product.have increased over the years. There are even constraints like transportation due to poor infrastructure and relatively under developed markets in the neighboring countries. The brand building is very critical in the industry and constant advertising is necessary. players have increased the percentage of their advertising and marketing costs as a percentage to operating income over the years. Players are now concentrating on the creation of brand image in order to economize their scale of operations and to increase their brand strength. the marketing game has become a vital factor for driving sales as against the manufacturing process of the products in the past. This ratio for the industry has increased from 4. Even. However.4 percent in 1993 to 6. In other words. the ratio for the industry has increased from 4.
Whirlpool and Samsung have registered double-digit growth in the direct cool refrigerator market. Trends: The consumer durables market in India was estimated to be around US$ 5 billion in 2007-08. In the air-conditioners segment. Companies like LG. etc.3 per cent while direct cool segment has grown by 9 per cent. conventional CTV volumes have been falling while flat TVs have grown strongly. Voltas. the sales of window ACs have grown by 32 per cent and that of split ACs by 97 per cent. Titan.The sector has been witnessing significant growth in recent years. refrigerators and Air-conditioners together constitute more than 60 per cent of the sales in terms of the number of units sold. 2. Market sources indicate that most CTV majors have phased out conventional TVs and have been instead focusing more on flat TVs. the frost-free category has grown by 8. real estate and housing demand. 2.2 Industry Size. MIRC Electronics. Growth.10 million units in 2007-08 and is expected to grow by at least 25 per cent. The growth across product categories in different segments is assessed in the following sections. Whirlpool. At the disaggregated level.000 units and by 8 per cent to 229. the semi-automatic category with a higher base and fully-automatic categories have grown by 4 per cent to 526. The industry is represented by major international and local players such as BPL. More than 7 million units of consumer durable appliances have been sold in the year 2006-07 with colour televisions (CTV) forming the bulk of the sales with 30 percent share of volumes. Since the penetration in the urban areas for these products is already quite high.3 Consumer Electronics: The CTV production was 15. The key product lines under each segment were as follows. respectively. CTV. Videocon. The flat segment of 11 . Consumer Appliances can be further categorized into Brown Goods and White Goods. the markets for both C-TV and refrigerators were shifting to the semi-urban and rural areas. In the refrigerators market. In the case of washing machines. helped by several drivers such as the emerging retail boom.000 units. The consumer durables industry can be broadly classified into two segments: Consumer Electronics and Consumer Appliances. Blue Star. greater disposable income and an overall increase in the level of affluence of a significant section of the population.
• Impact on farmers and manufacturers. on the one hand and. Major industrial houses have entered this area and have announced very ambitious future expansion Plans. There has been considerable growth in organized retailing business in recent years and it is poised for much faster growth in the future. • Impact on prices. enabling better access to markets to producers (including farmers and small producers) and enabling higher prices. However. • Effect on employment.High-end products such as liquid crystal display (LCD)and plasma display CTV grew by 400 per cent and 150 percent respectively in 2009–10 following a sharp decline in prices of these products and this trend is expected to continue.2010. • Impact on consumers. International Retail: 12 . The audio/video player market has seen significant growth rates in the domestic market as prices have dropped. In the context of divergent views on the impact of organized retail. it is essential that an in-depth analytical study on the possible effects of organized retailing in India is conducted. • Overall impact on economic growth. • Effect on small retailers and vendors in the unorganized sector keeping in Mind the likely growth in the overall market. Transnational corporations are also seeking to come to India and set up retail chains in collaboration with big Indian companies. Concerns have been raised that the growth of organized retailing may have an adverse impact on retailers in the unorganized sector.4 Evolution of Organized retailing in world: An important aspect of the current economic scenario in India is the emergence of Organized retail. lower prices to consumers. 2. It has also been argued that growth of organized retailing will yield efficiencies in the supply chain. opinions are divided on the impact of the growth of organized retail in the country. as competition is likely to intensify to scale and capture the mass market. This trend is expected to continue through 2009.CTVs now account for over60 per cent of the total domestic TV production and is likely to be around 65 per cent in 2007-08. on the other.
In developing countries. superstores. Unorganized Retail: In the developed economies. whereas in developing economies. wholesalers And distributors who carry products from industrial suppliers and agricultural producers to the independent family-owned shops and open markets remain a critical part of the supply chain in these countries. This is in contrast to near stagnant global retail sales during the Previous five years.1 Almost reflecting the growth in the world economy. the retailing business continues to be dominated By family-run neighborhood shops and open markets. the unorganized sector dominates the retail Business.5 Organized vs. discount and convenience stores are widely present in the developed world. 13 . The share of organized retail varies widely from just one per cent in Pakistan and 4 per cent in India to 36 per cent in Brazil and 55 per cent in Malaysia. global retail sales grew strongly in the last five years (200106) at an average nominal growth of about 8 per cent per annum in dollar Terms. the share of modern retail has risen from about 45 Per cent in 1996 to over 52 per cent in 2006. 1996-01. Grocery dominates retail sales with a share of approximately 40 per cent which varies from about 30 per cent in rich Japan to an Average of 60 per cent in poor Africa.Global retail sales are estimated to cross US$12 trillion in 2007. Retail sales through modern formats have been rising faster than total retail sales. 2. Modern retail formats. As a consequence. supermarkets. whereas such forms of retail outlets have only just begun to spread to developing countries in Recent years. such as hypermarkets. organized retail is in the range of 75-80 per cent of total retail.
Retail chain etc. hand cart.Organized Retail Sector Unorganized Retail Sector Factor Organized Retail Sector Unorganized Retail Sector Definition Modern form of retailing Traditional form of retailing Examples Hypermarket. lack of management. 14 . government support etc. expansion etc. pavement vendors etc Market Share 3% 97% Market Growth 35% 6% Challenges Poor supply chain aggressive Use of labour intensive technology. Mom n Pop stores.
In China and Russia these restrictions were progressively relaxed in the 1990s and in India partially in the 2000s. East Asia outside China (South Korea. Central America (e.g. Colombia. have been similar to countries in the second wave. India. and Czech Republic) and South Africa. Southeast Asia (e.2. but multiple-brand foreign firms are still barred in Retail although they can set up wholesale operations. Hungary. Ecuador. Malaysia.g..g. North-Central Europe (e.. and Guatemala). Philippines. Vietnam). 2006.. the main reason why they lagged behind was the severe restrictions on foreign direct investment (FDI) in retailing in these countries.g. Southern-Central Europe (e. The first wave took place in the early to mid-1990s in South America (e. urbanization. Kenya). According to the authors. and Chile).g. Southeast Asian Countries (e.. some countries in Central and South America (e. and the share of women in workforce..g. Reardon and Berdegue. Peru.. Bulgaria). The demand side features of these countries. The second wave happened during the mid to late 1990s in Mexico. Nicaragua.. 15 . Indonesia). Brazil.g. and Taiwan). 2007). Thus. India allowed foreign companies to own up to 51 per cent in single brand retail joint ventures (JVs). and Bolivia). Argentina. etc. the third wave countries which include China. Poland. such as income.. size of the middle class. China. and Russia.g. Thailand.6 Spread of Modern Retail in Developing Countries: The arrival of modern retail in developing countries occurred in three successive Waves (Reardon and Hopkins. India and Russia are late comers in the diffusion of modern retail. The third wave has just begun in the late 1990s and early 2000s in parts of Africa (e. In January 2006..
Foreign business accounted for 14. Ltd. On an average each of the top 250 retailers in the world has operated on an average in 5. 2007). 2. As home markets have become crowded and with opportunities in emerging markets rising. modern retailers from developed countries have been turning to new markets.4 per cent of retail sales of these companies in 2005-06 up from 12.6 per cent in 2000-01. The retail sales growth of companies which have ventured into 16 .7 Globalization of Retail: There has been a creeping internationalization of retailing over the recent period. 2006 Source: Planet Retail and Technopak Advisers Pvt.Share of Organized Retail in Selected Countries.Stores Report.9 countries in 2005-06 (July-June) against five countries in 2000-01 (Deloitte.
• Zoning and hours regulations to limit the diffusion. The US retailer Wal-Mart.foreign markets has been faster than those that have confined themselves to home markets. West European and South African retail companies are the most outward looking. For example. The West European firms.8 Regulatory Framework: It is interesting to note that regulatory restrictions on the growth in modern retail is more stringent in developed rather than in developing countries. Most of the Japanese retailers are insular operating only domestically. • Pricing regulations that prevent modern retail companies from pricing below cost and prompt-payment regulations to secure speedy payment to suppliers. and financial access. is a notable exception operating in 14 countries in 2007. the world‘s biggest retailer. Merger and acquisition plans are now looked at more critically by the national and European competition authorities. As noted by Reardon and Hopkins (2006). While in most countries opening hours are liberalized including holiday trading. They are: • Competition policy that limits concentration and collusion. The five South African retailers in the top 250 list conducted business in an average of 8.9 countries in 2005-06 and generated 28. setting up of hypermarkets has become very difficult since the late 1990s and early 2000s as governments became alive to the demands of traditional small retailers and non-mobile consumers in these countries. and convenience of organized retail. largely in Central and Eastern Europe. enhancing organizational capacity. The above regulations 17 . there are four types of policy regulations that can be seen in countries which have experienced advanced retail expansion. in most West European countries. expanded into an average of 9. generating on an average 13 per cent of these companies‘ sales. • Policies to strengthen traditional retailers and suppliers through technology and practice upgrading. As far as the international expansion is concerned. the very small number of countries where opening on Sundays are prohibited include developed countries such as Germany and Austria (Planet Retail). 2.7 countries outside US in 2005-06 up f rom three countries in 2000-01 and two countries in 1996-97.1 per cent of their sales from foreign operations.8 countries particularly in the African continent in 2005-06. The US retailers are mostly home-market based operating just in an average of 3. market penetration. among the top 250 retailers.
in developing countries. while the population in the age-group 35-50 years will decline leading to acute shortage of middle and upper management positions. on the one hand and the traditional retailers and suppliers to the modern retail. on the other. Recently.were put in place in different countries basically with a view to balance the conflicts of interests between modern retail. Indonesia. These restrictions involve the use of a combination of competition laws. Second. it is expected that retailers in developed countries will increasingly move to the markets of developing countries for growth.6 per cent during 1994-00 but the growth slackened to 4. there will be plentiful supply of workforce and consumers in the younger age groups. and Thailand) imposed a number of restrictions on the growth of large retail companies particularly the transnational companies in contrast to a fairly liberal approach to the retail sector followed until the late 1990s.10 Indian Retail: The growth of the retail trade in India is associated with the growth in the Indian economy.7 per cent per annum during the next three years before the growth 18 . This is based on a projection of three significant changes that will occur. such as travel. countries in Southeast Asia (Malaysia. the population in the age-group 50-70 years and above in the developed world will explode.9 Future Trends: The Deloitte-Stores (2007) study held that the retail business would slow down definitely over the next decade in developed countries. Third. this demographic shift will make the developing countries more dynamic and risk-taking enabling them to grow much faster than the developed world. and limits on operating hours (Mutebi. Gross domestic product (GDP) grew by an annual rate of 6. healthcare and maintenance of the elderly. Driven by these trends. First. Besides. while it would grow strongly in developing countries. 2. 2. shifting the share of consumer spending further away from goods towards services. land use restrictions (zoning laws). the population growth in the agegroup 20-35 years in these Countries will be relatively modest making the hiring of entry-level workers difficult. FDI regulation. 2007).
7 per cent per annum during 1994-00 to 4 per cent per annum during 2000-03. 90.remarkably rose to 8.000 to one million. 2003-07 at around 11 per cent. more than doubled from 157 million to 327 million during the last decade 1995-96 to 2005-06. 1994-07 (Compound Annual Growth Rate) 19 . the number of people in the income groups of ―aspirers‖ and the middle class with annual income ranging from Rs. GDP.3).8 per cent during 2000-03 and a smart pick up in the last four years.3 The data from the Central Statistical Organization (CSO) indicate that the growth of real private final consumption expenditure. Private Final Consumption Expenditure and Retail Sales Growth. Retail sales (in nominal terms) in the country also followed a similar pattern: a high annual growth of 13. This meant a substantial rise in disposable income of Indian households since the mid-1990s.6 per cent during 1994-00. which dipped from an average of 5. shot up to 6.7 per cent per annum in the last four years (Table 2.7 per cent per annum during 2003-07. a low growth of 4. Based on the Market Information Survey of Households (MISH) of the National Council of Applied Economic Research (NCAER).
Total vs Organized 2. starting in the late 1990s. This chapter highlights the following issues: (a) industrial estimate of future growth in total retail during the next five years.11 Future Scenario in Retailing: Introduction The emergence of organized retail has been a recent phenomenon in the country.Growth India Retail . at nearly 20 per cent per annum during the past three years. Its growth till 2006-07 was reasonably fast. There are signs that the growth of organized retail has accelerated in 2007-08 and is expected to gather further momentum during the coming years. Unorganized retail also grew but at a slower pace of nearly 11 per cent per annum. (b) relative share of organized vs. unorganized sectors. (c) the amount of additional investments that are envisaged in retail in the medium term. (d) estimates of employment 20 .
and (h) the concentration in retail industry. and are expected to grow at 20 percent in 2008–09. respectively.000 will rise from about 336 Million in 2005-06 to 505 million in 2009-10. and 25 per cent. Growth of Retail and its Distribution The NCAER. Samsung. (f) Projection of real estate availability. The sales of the Indian retail industry have been about US$ 322 billion (Rs.generation. increase in consumer awareness. It is the seventh largest retail market in the world. easy availability of finance. microwave ovens. Products like washing machines. 90. and introduction of new models. 2. based on its Market Information Survey of Households (MISH). Industry sales were estimated to be about US$ 5 billion in value in 2007–08. has projected that the consuming class consisting of the ―aspirers‖. Overview: With the increase in income levels. with organized retail expected to garner about 15 per cent share by 2015 from the current 5 per cent. Some of the prominent global players in the consumer durables sector include Philips. consumer financing has become easier and urban and rural markets are growing at the annual rates of 7 per cent to 10 per cent. Sony and Nokia. This implies a huge growth potential of Retail in the country.574 billion) in 2006-07.12 Recent Developments: Consumer Durables IBEF: December 02. 2009 Several key factors are driving growth in the consumer durables sector: disposable income levels are rising. the middle class and the rich with annual household income of above Rs. the demand for consumer durables has increased significantly. (e) geographical penetration of organized retail. color 21 . Indian retail industry is projected to grow to about US$ 590 billion by 2011-12 and further to over US$ 1 Trillion by 2016-17. a growth of more than 25 percent over 2006–07. amounting to about 35 per cent of India‘s GDP. air conditioners. 14. Consumer durables is one of the fastest growing industries in India.
13 KEY CONSUMER DURABLES. exchange offers. the government spending is very less on electrification programs in rural areas. However. & GROWTH TRENDS: The consumer durables market in India was estimated to be around US$ 4. This factor discourages the consumer durables companies to market their products in rural areas. refrigerators and Air-conditioners together constitute more than 60 per cent of the sales in terms of the number of units sold.Share by Volume Source: Cygnus Quarterly Report. For example. 2. there are still very few players in categories like vacuum cleaners. MNC's major target is the growing middle class of India.5 billion in 200607. The market share of MNCs in consumer durables sector is 65%. and dishwashers. CTV. An important factor behind low penetration is poor government spending on infrastructure. 22 . However. Key Consumer Durables . discounts. their well-acknowledged brands. and hold over wide distribution network. the penetration level of the consumer durables is still low in India. Aug 2007. More than 7millionunits of consumer durable appliances have been sold in the year 200607 with color televisions (CTV) forming the bulk of the sales with 30 per cent share of volumes. and intense competition. Consumer durables sector is characterized by the emergence of MNCs.televisions (CTVs) are no longer considered luxury items. MNCs offer superior technology to Consumers whereas the Indian companies compete on the basis of firm grasp of the local market.
5 million units. At the disaggregated level. Findings till date : Product –wise Analysis CTV The CTV production was 15. is deeper reach into the market and increased penetration. a factor which is most common during purchase of CTV. given its widespread use. the market is getting reinforced by the replacement segment as well. Market sources indicate that most CTV majors have phased out conventional TVs and have been instead focusing more on flat TVs. It has also been found that. overall growth in services and industrial sectors and infrastructure development in suburban and rural areas.& how do they affect the purchase decisions. it has been observed that the purchase decisions are affected by a combination of two or more factors. fuelled by favourable consumer demographics. Computers etc.gatekeeper etc. The growth of refrigerator segment is projected to be between 18 to 22 per cent over the next5 years. High-end products such as liquid crystal display (LCD) and plasma display CTV grew by 400 per cent and 150 percent respectively in 2006–07 following a sharp decline in prices of these products and this trend is expected to continue. family members from time to time play many roles of influencer. the final part of the thesis will try to draw a clearer picture on these factors.the same factor may not be having equal importance during the purchase of refrigerators. Recently. A critical success factor for the refrigerator market. Several Indian and MNC players are looking to strengthen their presence in India to leverage this opportunity. conventional CTV volumes have been falling while flat TVs have grown strongly.( These are explained in the annexure). The consumer durables industry in India is set for sustained growth over the long term. Many factors inside the factor of ―Family Influence ―are also present.decider. Refrigerators are one of the most sought after appliances in Indian middle class homes. The refrigerator market has two segments: Direct Cool and the relatively new Frost-Free type. The flat segment of CTVs now accounts for over 60 per cent of the total domestic TV production and is likely to be around 65 per cent in 2007-08.10 million units in 2006-07 and is expected to grow by at least 25 per cent.Body of thesis: Research Progress The research has found significant factors which affects consumers purchase decisions. 23 . The market for refrigerators in 2006-07 was about 6.
24 . Brands account for 10 per cent of the total consumer goods market in India. Thus the study is mainly focused on finding the major factors affecting consumers Purchase decisions while buying branded computers. while organized retailing is around 2 per cent of the total industry. The topic of the study is not about finding the factor behind buying assembled or branded PC/laptops. the penetration of branded products is increasing. Though branded computers are perceived to be costlier than nonbranded computers. This highlights the need for a strong distribution network to penetrate deeper into the potential market.Computers: Purchase decisions for computers are largely affected by the factor of Assembled & Branded. The relative shares of branded computers at the organized sector indicate that a significant share of branded products is being sold through unorganized channels.
Chapter 3 Changing behavior of consumers 25 .
3.1 Consumer classes:
For the purpose of study I am using the classification given by NCAER .According to the National Council for Applied Economic Research (NCAER), India’s premier economic research institution, based on consumption indicators, which is more relevant for ascertaining consumption patterns of various classes of goods there are five classes of consumer households, ranging from the destitute to the highly Affluent, which differ considerably in their consumption behavior and ownership patterns across various categories of goods. These classes exist in urban as well as rural households both, and consumption trends may differ significantly between similar income households in urban and rural areas. Structure for Indian consumer market: Consumer classes Structure for Indian consumer market: Consumer classes The rich The consuming class The climbers The aspirants The destitute Total Annual income 1996 2001 Annual income 2007 Change
215,000&more 45 – 215,000 22 – 45,0000 16 – 22, 0000 Below Rs- 16,0000
1.20 32.50 54.10 44.00 33.20 164.80
2.00 54.60 71.60 28.10 3.40 180.70
6.20 90.00 74.10 15.30 12.80 199.20
4.16 1.79 0.37 0.65 0.61 0.21
3.2 Factors affecting to the consumer behavior:
3.3 Consumer buying process:
3.4 Industry classification:
The consumer durables industry can be broadly classified as consumer electronics and consumer appliances. The consumer appliances category can be further segmented as white goods and brown goods.
3.5 The key players and their products:
).8 per cent).).8 per cent) The sector recording negative growth is B&W TV (.7%) The Refrigeration Industry has reached 3.7 million units in the last year with a growth of 5 per cent. Color Picture Tube (23 per cent.8%). 29 .growth of 97% in the year 2006-07 and the trend is expected to continue.6 per cent) Micro Wave Woven (27. Washing Machines is estimated to have grown by 18. DVDS (25 per cent) VCD/MP3 (20 per cent). clock (8 per cent). Mobile phone production is expected to grow at a compound annual growth rate of 28.3% from 31 million units in 2006 to 107 million units in 2001 The sectors which have recorded excellent growth rates of more than 20 per cent in terms of quantity produced are Air Conditioners (25 per cent). Window Air Conditioners (18.35 million units in 2003-04 to 1. Some sectors which have recorded moderate growth of 0 to 10 per cent are refrigerators (5 per cent). Washing Machines (18.1 per cent Watch (10%). Direct Cool Refrigerator (2.16.6 Market analysis: Industry sales were US$ 4.2 million units during 2004-05 with a growth of 25 per cent from 9.3 per cent). The Air-Conditioners Industry has reached at 1. Split ACs have been g rowing at a much faster rate than window ACs. Split Air Conditioners (42.1 per cent from 1.6 million units in 2004-05. The sectors which have recorded high growth rates between 10 and 20 per cent in April-March 2004-05 over the corresponding previous period are Color Television (12%).5 billion in value in 2006-07 and more than 7 million units in volume terms.8 lakh units in 2003-04.3. Plasma display panels and liquid crystal display TVs have registered an average growth of more than 250% 2006-07 and the trend is expected to continue.9 million units in 2004-05 from 3. Frost Free Refrigerators (13.
30 . The first half of the year and the first quarter of the financial year. Watch and clock have registered growth of 10 per cent and 8 per cent from 20.6 mn units and 26. The B&W TV has recorded a negative growth of 16. as held by the industry representative.4 mn units in 2004-05.6 mn units and 28. DVD Players are estimated to have grown by 25 per cent in 2004-05 with the volume estimated to be 625000 units.25 million units in 2004-05 from 8.7 per cent from 3 million units in 2003-04 to 2. Overall.1 per cent in 2004-05 by reaching 9. The unorganized sector has occupied a major share in manufacturing and supplying VCD/MP3. 2005. The de-growth seen in the first quarter of the current fiscal has been mainly due to the value added tax (VAT) regime introduced in April. 2005 has seen a little setback for the domestic consumer electronics and durables industry with the two largest segments of the industry .75 lakh units in 2003-04. the refrigerator segment had achieved a negative growth of 4.4 million units. The VCD/MP3 industry has registered 20% growth and has achieved production of 8.3 per cent growth with 3.5 million units in 2004-05.25 million units in 2003-04.color televisions (CTV) and refrigerators facing decline in production and sales during the period. But the Air conditioners and washing machines market have grown at the rate of 20% . Microwave ovens has grown by 27.3 per cent in volume terms and two per cent in value terms during the period.3 million units in 2003-04 to 22.5 lakh units compared to 2. The Indian Colour Television industry has grown by 12.
0 13.1 Lakh units Lakh units Lakh units Lakh units 37 7.5 8.55 8.8 42.8 38.Production of consumer durables: Production item Consumer durables/white goods Refrigerator Frost free Direct cool Air conditioners Window Split Washing machines Microwave ovens Consumer electronics Value overall Color television Color television B&W TV B&W TV VCD DVD Watch Clock Lakh units Rs Crore Lakh units Rs crore MN units Nos Lakh units Lakh units 14500 82.5 7000 30 482.5 27.0 12.8 2.22 2.58 3.8 25 unit 2003-2004 2004-2005 % growth 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.7 25 9.75 3.6 18.85 8.000 206 263 156600 92.58 13.0 Lakh units 2. The growing Indian middle class is an attraction for companies who are out there to woo them.3 Lakh units Lakh units Lakh units 7.0 -16.2 50. 31 .55 7.4 62500 226 284 8.67 9.68 16 18.5 7580 25 361.7 -25.7 8.25 5.34 30.1 8.33 29.51 12.0 16.
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. Festive season sales: Demand for color TVs usually pick up during the festive seasons. Sale of a particular product is determined by the cost of credit as much as the flexibility of the scheme.Availability of newer variants of a product: Consumers are spoilt for choice when it comes to choosing products. it is the brand name. For middle and upper range consumers. Product pricing: The consumer durables industry is highly price sensitive. This period will continue to be the growth driver for consumer durable companies. at least for lower range consumers. growth and trends: During FY07. followed by refrigerators and air conditioners at 18% and 13% respectively. According to a working paper released by the Indian Council for Research on International Economic Relations (ICRIER). technology and product features that are important. Consumer Durables: Industry size. The share will grow with bigger players entering the market. Innovative advertising and brand promotion: Sales promotion measures such as discounts. volume share of the single largest consumer durable was color TVs at 30%. Rise in the share of organized retail: Rise in organized retail will set the growth pace of the Indian consumer durables industry. Newer variants of a product will help a company in getting the attention of consumers who look for innovation in products. As a result most companies come out with offers during this period to cash in on the festive mood. making price the determining factor in increasing volumes. free gifts and exchange offers help a company in distinguishing itself from others. Availability of financing schemes: Availability of credit and the structure of the loan determine the affordability of the product. Washing machines and other assorted consumer durables captured a share in the total volume by 5% and 34% respectively. 32 .
domestic consumption of refrigerators declined by almost 4% between FY05 and FY08. The imposition of anti-dumping duties on import of colour picture tubes will hit the manufacturing costs of CTVs produced in India. This is because the combined effect of rising input costs and a higher interest burden will negate the effect of such reduction. On the demand side. 33 .3% during FY07 when compared to a 21% growth in the previous year. while imports climbed. the reduction in the general rate of excise duty (CENVAT) from 16% to 14% as proposed in the Union Budget for FY09 will not have any effect on the selling price of colour TVs. Further. As per CMIE.Television Sets: Growth in sales: FY07 witnessed the highest number of TV sets being sold when compared to the previous two corresponding years. growth in sale of TV sets was slower at 14.
as per CMIE. Domestic consumer electronics companies together reported a subdued sales growth of almost 17% in FY07. 35 . it was the smaller ones whose sales were negatively affected that eventually brought down the industry sales growth. According to CMIE. exports grew to7% of the total consumption in FY08. as imports slided.5% growth in the Mar 08 quarter compared to a substantial 17. While the larger companies reported robust growth in sales. the industry witnessed a slower 10.18 mn units. From 3% of the total consumption in FY05. At 99% each in FY06-08. The refrigerator industry posted a sluggish performance since the beginning of FY09 on the back of volatile steel prices. domestic production of refrigerators in the total supply remained at the same levels in the past three years ended FY08. domestic consumption of refrigerators witnessed a decline between FY05 and FY08. On the supply side. the share of production reported a mere 100 basis point increase over FY05.Refrigerator: demand and supply side dynamics: According to CMIE statistics.5% growth in FY06. The first quarter saw a production growth of a mere 50 basis points to 2. while exports grew. Sales of Consumer Electronic Companies: The consumer electronic goods industry underwent a slowdown during the last quarter of FY08.4% growth in the previous corresponding quarter. on the back of a robust 40.
Also consumers are availing credit or loan from banks and other financial institutions to fulfill their needs and wants. McDonalds. tradition and values. The Indian consumers strictly follow their culture. The trend that higher segment consumers only buy the top brands has also come to an end. as a result of which foreign companies were forced to give an Indian touch to them in order to succeed in India. The Indian consumer of today gives preference to features of a product rather than its brand name. Raymond is still India‘s largest textile company and Haldiram is doing well despite the presence of McDonalds and Pizza Hut. MTV. even then they are willing to buy the product. Even after liberalization Indian companies and brands are doing very well. No more the customers buy only to fulfill their basic needs and emphasise on savings itself. 36 . It is clearly evident from the fact that despite many foreign brands being sold in India. If they feel that a particular product offers them more value and its price is high. Coca Cola India and many more had to Indianise themselves to flourish in India. Not often do we see any home with cars of the same brand or household products of the same brand. The consumers today are not confined to a single brand and prefer change rather than sticking to the same brand. Indian consumers have become value sensitive and are not much price sensitive as was the case earlier. Karva Chauth is celebrated with more zeal and enthusiasm than the Valentine Day.Changing attitudes of Today’s customers: Today customer likes to indulge in buying spree. Star TV. Pepsi. The use of credit card for shopping is a new emerging trend in India.
The rural households have earned huge money due to price rise in real estate.The Indian consumers are spending thick and fast on premium and luxury products. They have all the modern amenities at their home and their standard of living is fast improving. Customers are the ultimate beneficiary of the fierce competition in the market. This has led to the growth of shopping malls where shopping. The Indian consumers have shown another major change in their buying behaviour. Dell. services and ambience. There is a stiff competition in the Indian market today and it has become a buyer‘s market from seller‘s market. They just don‘t want availability of products. It is reflected in their living standard and possession of all electronic gadgets and luxury cars. nilgiris etc has given a huge fillip to the growing market by not only selling products but also the experience.com. Amazon . entertainment and better facilities are all available under one roof. 37 . Competition has reduced prices to a great extent and has forced the manufacturer to maintain product quality to sustain in the highly competitive market. They are also shifting towards industrial and services sector. The Indian consumer are much more inclined to the organized sector. hence their purchasing power is increasing. The consumers today do not mind availing credit as when needed. Consumers are also availing the information available on net through various forums and websites. Marketers response to Consumer attitude: With change in consumer buying behavior the companies also made necessary changes in their marketing strategies. Though in a small way internet and and telemarketing have also caught the attention of the Indian customers. croma . To a great extent the presence of heavy weight such as the pantaloons. The rural Indian consumers are also showing signs of change. etc have carved a good niche for them in the sector. So credit availability has become a key factor for determination of a buying a good. big bazaar. The changes include: 1) Launching of premium products by companies to fulfill requirements of high class consumers. they also want better experience.
5) Due to sharp growth in the communication sector. instead. exquisite 38 . Through this strategy electronic companies received very good response from the consumers in the recent past and were able to build a considerable market for their products. For example mobile service providers provide lifetime option and free calls to other mobile users under a specific plan of the company. What is even more interesting is that the customer does not have to pay the amount in lump sum. The construction companies are fulfilling this requirement of consumers by providing them luxurious houses.2) Since purchasing power of rural India has increased. 6) Due to fierce competition in the electronics market and people‘s willingness to purchase hi-tech products the rates of LCD and plasma TVs have been slashed by 25%-30%. 8) Consumers of India have developed a tendency to save travel time. This improves the company‘s credibility and helps to build its customer base . 7) Indian consumers have developed a liking for foreign tours and holidays. This has reaped huge benefits for companies like in cases of PepsiCo. Coca Cola India and other FMCG companies. the companies have started shifting their focus towards rural India to capture untapped rural market. 4) Companies design their products on the basis of market segmentation so that they have products to suit every pocket and requirement. he has the facility to make the payment in monthly installments according to his convenience. companies are providing many schemes and plans to attract customers. For example companies have provisions to send their technicians to repair the cars struck at highways or other outer locations due to technical failure or in case of a mishap. 9) Consumers of India want better housing facilities. For such consumers low fare or low cost carriers are available that provide air travel facility at a very affordable price. 3) Companies not only aim to sell their products but also aim to provide better after sales services to its consumers. This has led to development of many travel agencies that provide a planned foreign tour at a reasonable price.
full time security. rural consumers should be provided with easily payable consumer finance schemes and basic services. 11) The need for internet is fast growing. 3. after sales services to suit the infrastructure and the existing amenities like electricity. improving lifestyles. gymnasium. and rise in temperatures. club house. low fat food. Hence companies are making products to suit their health like low calorie. round the clock water and electricity supply. 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. This has revolutionized the communication sector and provided a means of communication that was never ever in anybody‘s dreams till a few years back.interiors. 12) Indian consumer‘s liking for credit is also increasing rapidly. 39 . growth in disposable income. voltage etc. 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. low running cost. power availability. 10) Indian consumers are increasingly becoming aware of the importance of health and hygiene. etc. To fulfill this need of consumers. As far as hygiene is concerned companies have fully mechanized their plants to maintain hygiene and pack the food in such a way that it remains fresh for longer period of time and does not lose its nutritive value before consumption. within the premises. While the consumer durables market is facing a slowdown due to saturation in the urban market. Banks have also become liberal in their loan and credit policies. Hence many financial institutions have come into existence in India and are flourishing.7 The road ahead: The rising rate of growth of GDP. mobile manufacturing companies are providing internet access facility on mobile phones.
So. a flood of imports is unlikely and would be rather need based. 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. Rural India that accounts for nearly 70% of the total number of households. The Internet being now used by the market functionaries that will lead to intelligence sales of the products. At the same time. Washing machines and refrigerators will also benefit from lower input costs. 40 . 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. The urban market is a replacement and up gradation market now. has a 2% penetration in case of refrigerators and 0. The other factor for surging demand for consumer goods is the phenomenal growth of media in India. Purchase necessarily done only during the harvest. The ability of imports to compete is set to rise. local manufacturing will continue to stay competitive. believed to be months `good for buying‘. festive and wedding seasons — April to June and October to November in North India and October to February in the South. there will be some positive benefits in the form of reduction in input costs.5% for washing machines. Reduction in import duties may significantly lower prices of products such as microwave ovens.Currently. the effective duty protection is still quite high at about 35-40 per cent. It will help to sustain the demand boom witnessed recently in this sector. leading to increased expenses due to transportation. According to survey made by industry. should be converted to routine regular feature from the seasonal character. the rural market is growing faster than the urban India now. However. offers plenty of scope and opportunities for the white goods industry. Otherwise. whose market size is quite small in India. rural consumers purchase their durables from the nearest towns.
According to a study by the McKinsey Global Institute (MGI).8 million units in January-March 2009. up from 30 per cent in 2007-08.28 million washing machine market in India by the end of 2009. Moreover. Indian incomes are likely to grow three-fold over the next two decades and India will become the world's fifth-largest consumer market by 2025. Retail opportunity is slated to rise by about US$ 160 billion in India in five years. Further. In urban India.1 billion. according to the figures released by ORG-GFK. It is expected to reach US$ 51 billion by 2010. with around 45 per cent of Indians living in urban areas by 2050. The consumer durable goods output witnessed a 2.6 per cent of total retail to 26 per cent in the next five years. According to a report by McKinsey. Whirlpool is on the expansion mode and is targeting a 22 per cent share of the US$ 423. up from 44 last year. In the given scenario. growing 2 per cent to 2. The turnover of the organized retail segment in India is pegged at around US$ 8. 41 . CB Richard Ellis. modern retail is likely to grow from the current 9.93 billion by 2015. as per Technopak Advisors The Indian consumer durables market seems to be relatively untouched by the economic slowdown. According to global real estate consultant. India has moved up to the 39th most preferred retail destination in the world in 2009. India's overall retail sector is likely to grow to US$ 419.955 a year. Colour televisions have seen an increase in sales. India is likely to see rapid urbanization. About 61 per cent of total urban income comes from households that can be classified as middle class—earning between US$ 1. according to a study co-authored by National Council of Applied Economic Research's (NCAER) Rajesh Shukla and Future Capital Research's Roopa Purushothaman.493 and US$ 9. expenditure by the middle class accounts for the bulk of India‘s urban consumer expenditure. and is launching a range of new products with an investment of US$ 4 million for the same. urban markets will continue to fuel the Indian economy for quite some time to come. according to a report by the Development Bank of Singapore (DBS).5 per cent rise in durables output in the first quarter of 2009.
a large number of hi-technology durables are expected to flood the US$ 4. Samsung. LG.03 billion Indian durables market in 2009. Haier and Videocon are among companies planning new product launches in the coming months 42 .Moreover.
Chapter 4 Major Organized & Unorganized Players 43 .
refrigerators & television include: Competition analysis COMPETITION OVERVIEW: Samsung India (CURRENT MARKET SHARE-37%): Initially the strategy of Samsung in India was to create premium image by emphasizing global brand. It is an aggressive marketer.LG.4. price them strategically. position them sharply and keep making the magnetism more potent. washing machines. In line with the Global Digital Initiative of the Parent Company. 44 . Having understood the finer differences in consumer motivations. It focuses on low and medium price products. Samsung also started playing price game. Samsung India: Acquired digital leadership in India by introducing its digital ready televisions like the 40" LCD Projection TV. After facing stiff competition from another Korean major. although it resulted in some loss of market share. In 2004 it reverted back to its premium positioning. LG India (CURRENT MARKET SHARE-23%): LG Electronics rightly understood the consumer motivations to create magnetic products. 43"Projection TV and the Plano series of Flat Colour televisions.1 Major players: The major players in the consumer durables industry. operating in different sectors such as air conditioners. it opted for sharp-arrow ‗reasons-to buy‘ differentiation over the ‗blanket-all approach‘ taken by most of the other players.
The company also has presence across the country with 21 company owned and 172 authorized service centres. In India. The name was changed to Kalyani Sharp India in 1986. Sharp India Ltd: Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and Electronics Pvt Ltd. the company was converted into a public limited company in the same year. Hitachi India: Hitachi India Ltd (HIL) was established in June 1998 and engaged in marketing and sells a wide range of products ranging from Power and Industrial Systems. The products were sold under the Optonica brand name. Industrial \Components & Equipment. Sony India (CURRENT MARKET SHARE-21-22%): Sony Corporation. The company was entered into a joint venture with Sharp Corporation. 2001. and its products are used in 133 countries. Japan . VCPs and audio products. Air Conditioning & Refrigeration Equipment to International Procurement of software. Sharp has a production base in 26 countries with 33 plants. The company was accredited with the ISO-9001 certification in the month of February.Toshiba India: Toshiba India Private Limited (TIPL) is the wholly owned subsidiary of Japanese Electronics giant Toshiba Corporation and was incorporated in India on September 2001. VCRs. The company manufactures consumer electronic goods such as TVs. materials and components.a leading manufacturer of consumer electronic products to manufacture VCRs/VCPs/VTDMs. established its India operations in November 1994. Some of HIL‘s product range includes Semiconductors 45 . Sony has its distribution network comprising of over 7000 channel partners. Toshiba had a presence in India since 1985 and was represented in India through their Liaison Office. 215 Sony World and Sony Exclusive outlets and 21 direct branch locations. Japan.
high-tech plank that it is even planning to push its own envelope on obsolescence. plasma TVs and components into its fold. Besides understanding the strategy adopted by different players. High-quality designs have made the company a leading player in the electronics and entertainment business. The strategy is aimed at further broad basing the product offering of the company. concentration and balance. Sri Lanka and Nepal. Technologically it represented no advancement. LCD Projectors. It has technical tie-up with the Japan Victor Company. The world-class quality of Onida has enabled the company to make a breakthrough on the export front. which has largely dominated the top-end of the television market. the company manufactures home appliances such as refrigerators. So focused is Onida on positioning itself on the premium. microwave ovens. It also supports the sale of Plasma TVs. fixed cost.and Display Components. It has taken over multinational brands to 46 . across multiple market segments. It has plans to acquire Daewoo‘s consumer electronics businesses worldwide to bring LCD TVs. better known as JVC. Mirc Electronics (ONIDA): The company commands strong brand equity among consumers largely owing to the success of its Onida brand. Its popular devil ad although had engendered a strong emotional pull towards the brand. it has also been able to hold its market share. The company plugged the gap by touting its digital technology. much like Intel has been doing in its own industry. air conditioners and washing machines. Smart Boards and DVD Camcorders. Onida is a leading brand in Gulf market and also exports its models to Africa. and product differences need to be analyzed to determine the extent of rivalry between the existing players. This entails providing more features at a given price vis-à-vis competitors.industry growth. Like Videocon. Videocon (CURRENT MARKET SHARE-12%): It is the market leader in the consumer electronics and home appliances segments in India. compressors. the move would also help it acquire a consuming partner for the recently-acquired Thomson‘s picture tube business. LCD TVs. several other factors. Videocon has always been a price player and has an image of a low price brand. corporate stakes. Bangladesh.
Panasonic India (CURRENT MARKET SHARE-6%): Panasonic Corporation based in Osaka.000 and Rs 30 lakh (for a 103-inch screen). Because of reduction in import duties on CPT the cost advantage of Videocon is also on the decline. car stereos and CD systems. It also launched the worlds slimmest. it has at present multiple brands at the same price point.tail end brand or brands like Aiwa. The flagship brand Videocon has lost market share due to the presence of Sansui in the same segment.According to Panasonic The market potential for plasma TV was much greater in India than China. radios. It has already sold ten such units this month. Panasonic India plans to invest USD 100 million in its new plasma TV production facility in 2011. and industrial needs. Philips. and Onida and taken over Akai. View profile. It has the widest distribution network in India with more than 5000 dealers in the major cities . Ltd. Panasonic Electric Works Co. The company currently has five production units in the country. Agrawal Group . It has also led to a cannibalization of sales among these brands. Due to its multi-brand strategy. traces its roots to the company started in 1918 by Konosuke Matsushita.Manufactures consumer electronic products. tape-recorders.to flank the flagship brand Videocon in the low to mid priced segment.It also has a strong base in the semiurban and rural markets. This has led to a state of diffused positioning for its brands. Japan is a worldwide leader in the development and Manufacture of electronic products for a wide range of consumer. like Sansui. 47 . Chennai and Delhi. Gurgaon. essentially to fight against brands like BPL. Videocon is one of the largest manufacturers of television and its components in India and thus has advantages of economies of scale and low cost due to indigenization. Hence it is facing rough weather and also trying to boost exports. business. Vadodara.cater to un served segments. 1-inch plasma TV called Vierra PDP Z1. The demand for such high-end sets was increasing at a rate of 410 per cent in the country.. The company has priced its plasma TV between Rs 24. at Noida.
stainless steel blender and more. domestic fans. domestic appliances like electrical irons. toasters and fans. instrument cooling fans. Honda (Siel) Power Products Ltd (portable electric generators). hoists etc. Kelvin Systems cleaners). Hot shine Appliances . and PVC wires. lighting luminaries. E. accessories. Bajaj International - Exporters of electrical fans. electric fans & electric motors. retailer along with products list. cabin fans. Features list of wholesaler. Imports steel and engineering items . floor care equipment. lamps. fluorescent tube lights. BOSS Portable Blenders - Manufacturer and exporter of portable blender and home appliances includes hand held mixers. steam irons.U. Global Wonders - The fastest search engine. map and web guide for information on the most popular websites.C Industrial Fans & Motors - Manufacturers & Exporters of industrial fans. directory. Dealers for Carrier Aircon Ltd (air-conditioning equipment).Anchor - Manufactures electrical switches. Eureka Forbes - Details on consumer products include vacuum cleaners. household appliances. light fittings.P. mixers.P - Manufacturers of gas cookers & stoves & electrical appliances. consumer goods and electrical 48 . juice makers. high pressure water jet cleaners and electronic security systems. grinders. product range includes cooking ranges. oven toaster and grillers . and Eureka Forbes Ltd (vacuum Mangal Singh & Sons - Dealers in home appliances. consumer durable and more.
fruit juicer. health care product. deluxe decorative ceiling fans. 49 . mixer grinder. Panasonic fax machines. food mixer. printers. oven and dining sets. semi conductors. juicer- mixer-grinder. air operated pump. water purifier. box fans. cooking range. shaded pole motors. oven-toaster-griller. food blender. irons etc. Padmini Appliances - Manufacturers of gas stoves. washing machines. Onida - Provide an online showroom to purchase the entire range of Onida products. domestic appliances. includes television. sandwich maker. water heaters. refrigerator. lighting. home appliances and chemical plant machinery . Manufacturers of fans. color monitors and cordless phones. vacuum cleaner etc. Manufacturer and Exporter of various home appliances like roti maker. Nadi Industrial Fans centrifugal fans and special fans. vacuum flask. components. washing machines. and bacteria free water. ceiling fans. Non Stick Salora - Manufactures black-and-white & color television sets. electric hot plates. Offers free delivery. oven toaster griller. Orient Fan - Specialized in manufacturing mini motors. and digital cameras. product range includes axial fans. PICASSO Home Products Appliances and more.appliances. enabling technologies. Moniba - Manufactures chemical pump. multi media projectors etc. audio products. Philips - Details for consumer electronics.
Manufacturers of kitchen appliances. recipes. toasters. Details of product ranges from color TVs. walkman. ACs. cordless phones. TVs. hi-fi music systems. home theatre systems. ovens. fans. Sony World Televisions. refrigerators. agricultural and domestic pump sets. air conditioners. irons and room coolers. video CDs and home appliances. air conditioners. projection TVs. RMEG products.V etc.Sansui . food processors. water coolers. mixer grinders. tape recorder. washing machines.India - Manufacturer of electronic products. digital cameras. digital cameras. colour monitors. Kenwood digital hi-fi systems. portable audio systems. VCD. LD. Features wide ranges of products: car audios. DVD players. DVDs. audios. Sunflame Appliances electrical appliances in India. home theatres. 50 . audio systems. Singer - Manufacturers of sewing machines. Sony India Wega T. home appliances and Usha International - Manufacturer of sewing machines. Videocon - Suppliers of home appliances. video CDs. refrigerators. electric irons etc. televisions. Offers details about the machines. ventilating fans. and disc mans. Usha Lexus - Makers of home appliances like sandwich toasters. television sets etc. and Sumeet - Manufacturers of mixer-grinders. digital organizers. Sumeet outlets and more. oven. handy cams. and auto products. juicer. home appliances.
VCD. LD. Also.V etc. DVDs. with the acquisition of Thomson Displays by Videocon in Poland. DVD players. RMEG products. LG Electronics India Ltd has announced its extension plan in 2006. consumer finance. T. hi-fi music systems. VCD. water coolers. hifi music systems. walkman. DVD players. digital cameras. home theatre systems. digital cameras. The Indian companies like Videocon Industries and Onida are also planning to expand.V etc. walkman. pumps and office furniture. cranes. and Televisions.Vijay Sales - Dealers in consumer durables includes details for their product.G India - Details of product ranges from colour TVs. and more. digital cameras. Cdma mobiles. There has been strong competition between the major MNCs like Samsung. Features wide ranges of products: car audios. TCL Corporation is also planning to establish a $22 million manufacturing facility in India. RMEG products. LG. digital cameras. Voltas Limited - Makers of room air conditioners and refrigeration equipment. and Televisions. handy cams. includes machine tools. 51 . Videocon has acquired Electrolux brand in India. Features wide ranges of products: car audios. and Mexico. LD. portable audio systems. DVDs. portable audio systems. mobiles. and disc mans. and disc mans. home theatre systems. video CDs. industrial chemicals etc. customer care. handy cams. Samsung Electronics India Ltd . the company is marking its international presence. schemes. and Sony. L.Details of product ranges from colour TVs. T. video CDs. The company is going to invest $250 million in India by 2011 and is planning to establish a manufacturing facility in Pune. China.
are now focusing on rural areas also. and color televisions (CTVs). and LG Electronics India Ltd. split air conditioners. country's fiscal policy has encouraged Indian consumer electronic industry. fully automatic washing machines. and Sony. These companies are introducing gift schemes and providing easy finance to capture the consumer base in rural areas. Ltd. such as Samsung. These companies import their premium end products from manufacturing facilities that are located outside India. which are boosting the sales in these categories.According to supply Corporation (Applied Market Intelligence). Some companies like Samsung Electronics Co. Growth in 2005-06 Consumer Durables Air Conditioner Refrigerator Microwave Ovens Washing Machines Color Televisions (CTVs) Black & White Televisions Clock Watch VCDs Consumer Electronics (Overall) Growth 20-25% 5-10% 25% 5-10% 15-20% -20% 10% 10% 30% 9% 52 . The reduction on import duty in the year 2005-06 has benefited many companies. Indian consumers are now replacing their existing appliances with frost-free refrigerators. LG.
etc.Some Facts: 1. 4. Clocks and Watches 5. 3. washing machines. Competition among players is on the basis of difference in prices and well-acknowledged brands. built-in appliances. Ac Nilsson Consumer Markets Last Updated: January 2010 53 . air conditioners. non-kitchen appliances. Mobile Phones Acc. capital. 4. color televisions (CTVs). 3. 2. etc. cameras.2 Sector Outlook: Consumer durables Sector can be classified as follows: 1. Consumer Electronics includes VCD/DVD. Molded Luggage includes plastics. home theatre. vacuum cleaners. tumble dryer. Hi-Fi. water heaters. portable audio. Bargaining power of suppliers in consumer durables sector is limited due to threat of imports and intense competition. 4. Demand is seasonal and cyclical. White Goods include dishwashers. personal care products. music players. kitchen appliances. camcorders. and ability to hire purchases. microwaves. 2. Some of the entry barriers in consumer durables sector are distribution network. refrigerators.
eight of the top ten most confident markets in the fourth quarter of 2009 came from the Asia Pacific region. 54 . speaking at the Calcutta Management Association Rural Marketing Meet.3 million for 2010. 'Bird of Gold': The Rise of India's Consumer Market. modern retailers. Indian incomes are likely to grow three-fold over the next two decades and India will become the world's fifth largest consumer market by 2025. Rural Consumers As socio-economic changes sweep across India. India ranks second in the Nielsen Global Consumer Confidence survey released on January 7. Approximately 315 hypermarkets are expected to come into existence in tier-I and tier-II cities across India by the end of 2011.05 billion organized retail segment has grown 20 per cent in the September quarter 2009-10. the apex body of organized. The survey showed that in addition to the emerging markets of Indonesia and India. says a joint study by consultancy firm KPMG and industry body. The country's largest retailers—Future Group. Retail Estimates by the Retailers Association of India (RAI). moving up from its 2007 position as the world's 12th largest consumer market. 2010—an indication that recovery from the economic downturn is faster in India with consumers more willing to spend. the country is witnessing the creation of many new markets and a further expansion of the existing ones. According to Pradeep Kashyap.According to a study by the McKinsey Global Institute (MGI). Spencer's Retail and Shoppers Stop—have lined up investments of at least US$ 128. have shown that the country's US$ 21. chief executive officer of MART Rural Solutions. over 300 million people would move up from the category of rural poor to rural lower middle class between 2005 and 2025 and rural consumption levels are expected to rise to current urban levels by 2017. Associated Chambers of Commerce and Industry of India (ASSOCHAM) named `Reinventing India's Retail Sector'.
1 billion by 2009-10 and trebling it to US$ 271. The Ministry of Food Processing Industries is also planning to double the market size of the food processing industry to US$ 165.Mega retail chains are looking to build a high-quality supply chain—retailers such as BhartiWal-Mart. Samsung India and Whirlpool are reporting strong sales figures. Despite being the biggest names in the trade. toothpastes and hair-oils grew faster in rural areas than urban areas during April-September 2009. In 2009.000 units in 2008 to 1. FMCG According to a FICCI-Technopak report. Samsung has posted a growth of nearly 80 per cent in its refrigerator category. these retailers are ploughing rural areas to teach innovative farming methods and find the best suppliers among them. overall industry sales of LCD televisions grew by 93-94 per cent over the earlier year. Multimedia mobile phones have grown from 800.8 million in 2009. Carrefour and Reliance are working to strengthen their supply chain formula by roping in farmers as stakeholders. Consumer Durables A combination of changing lifestyles.8 billion by 2014-15. despite the economic slowdown. India's fast moving consumer goods (FMCG) sector is poised to reach US$ 43 billion by 2013 and US$ 74 billion by 2018. greater product awareness and affordable pricing have been instrumental in changing the pattern and amount of consumer expenditure leading to strong growth in the consumer durables industry. Demand for personal care products such as shampoos. as per the numbers released by market researcher AC Nielsen. higher disposable income. Companies such as LG Electronics India Ltd (LGEIL). 55 . The report states that implementation of the proposed Goods and Services Tax (GST) and the opening of Foreign Direct Investment (FDI) are expected to fuel growth further and raise the industry's size to US$ 47 billion by 2013 and US$ 95 billion by 2018. a period that includes the peak monsoon months.
consumer financing has become easier and urban and rural markets are growing at the annual rates of 7 per cent to 10 per cent. LG and Samsung continue to rule the market. and 25 per cent.09 million in the 2010 fiscal and subsequently expects the contribution from the country to its global business to increase by 10 per cent by 2014. Consumer Durables IBEF: December 02.000-crore consumer electronics industry in India had been fought and won. On the face of it. and are expected to grow at 20 percent in 2008–09. 2009 Several key factors are driving growth in the consumer durables sector: disposable income levels are rising. with organized retail expected to garner about 15 per cent share by 2015 from the current 5 per cent. Sony and Nokia.Japanese consumer durables company Panasonic expects to double its sales in India to US$ 945. not the game. nothing seems to have changed. nor the players and not even the prize. Videocon and BPL are making a comeback and retailers like Future‘s Kishore Biyani are launching store-brands. Industry sales were estimated to be about US$ 5 billion in value in 2007–08. an 8 percent compounded average growth rate (CAGR) between 2000 and 2004 (China grew 14 percent CAGR during this period. the industry seems to be gearing up for another battle. Vengabeats August 14th. Consumer durable is one of the fastest growing industries in India. The industry continues to grow sluggishly. 2006. a growth of more than 25 percent over 2006–07. Just about when everybody thought that the war for durability in the Rs 25. respectively. Samsung. Some of the prominent global players in the consumer durables sector include Philips. Indian firms such as Onida. 01:01 AM Korean firms LG and Samsung haven‘t won the battle for the consumer durables market. accounting for around 50 percent of the total Rs 25.000-crore industry and the other Indian as well as 56 .
―It is not for nothing that the Devil (a character that represents brand Onida) is back.multinational players like Videocon. Mirc is making an aggressive play in categories such as washing machines. Whirlpool India is another company. says Ajit Nambiar. which ruled the CTV market in India till early 2000 and then slipped into heavy losses (the net loss stood at Rs 214 crore in 2003 and Rs 214 crore in 2003 and Rs 74 crore in 2005) . The group‘s oil business contributes significantly to this. BPL Ltd. and Sony continue to play catch-up. things are stirring. Videocon Industries. there are exports. recently announced a $20-million (Rs 90 crore) investment for 2006 and 2007 and launched several new products. The company. the also rans are refusing to play their part and are making a strong comeback bid. Then says Mirchandani.‖ says Dhoot. 57 . which after a long cold winter. air conditioners. LCDs and plasma screens under the Sanyo and BPL brand names and is also foraying into refrigerators. is committed to India.000 crore venture by 2009 with a considerable market share in all segments. ―He is here to rule the market again‖. ― We intend to be a 2. and hopes to translate this into a competitive advantage in the Indian market.000 and 150. Toshiba and Electrolux in the domestic market. Whirlpool. Hitachi and various other smaller companies that are aiming to corner some share in the industry. but the consumer electronics business is thriving. Sharp.500 crore today. Kelvinator. Apart from televisions. globally. For one. another leading Indian player that go battered during the late 90s and early 2000s. its Managing Director. Chairman Venugopal Dhoot identified a different route to growth: Allwyn. Mirc Electronics. The latter has committed $100 million (Rs 450 crore) to its Indian operations. too.‖ gushes Gulu Mirchandani. is getting back into shape. Hyundai. The company says Arvind Uppal. boasts revenues of Rs 4.000 color televisions each in Ukraine and Russia last year. Chairman and Managing Director (MD). Chairman and Chief Executive Officer. Then. Haier. Under the surface though. Sanyo BPL. it is Videocon. which recorded a net loss of Rs 38 crore in 2005-06. where it has historically held its own against competition. besides the Korean majors. Mirc Electronics. washing machines and DVDs. He claims to have sold between 100. and of manufacturing facilities such as French Electronics major Thomson‘s color picture tube. has formed a 50:50 joint venture with Japans Sanyo Electric. ―If there is one player that will thrive in Indian market. BPL. Sony. there are others like Godrej Appliances. The JV has launched CTVs. microwave ovens and DVDs.
These ambitions plans and strategies would not seem misplaced if the consumer electronics industry were growing the way other industries are. Last year, when GDP grew by around 8.1 percent, the stock markets boomed and most industries, even those that had been in dire straits, fast moving consumer goods, grew at between 15 and 30 per cent; consumer electronics was one sector that grew only 5 percent. In terms of value, the biggest constituent of the segment, CTVs, actually saw a decline. Nor are growth estimates for the future any more sanguine. According to market research agency Data monitor, the industry is likely to grow around 7.7 percent CAGR for five years ending 2009.
There are many reasons for sluggishness in the industry; some immediate and others, historical. Most people attribute last year‘s slow growth to two factors-confusion regarding value-added tax (VAT) and a surge in stock markets. ―Confusion regarding VAT in the first quarter last year took a heavy toll on sales,‖ says K.R.Kim, intriguing correlation between stock markets and consumer durables industry. ―It has been observed that whatever stock markets or real estate sectors are booming, consumers tend to postpone their consumer durable purchases and invest their money in these assets.‖ Says Bhuwan B. Singh, Director (Client Service), ORG – Gfk
Then, there are historical reasons. When the government opened up the sector, recalls Mirchandani, incumbent players ―were not ready for competition and most of them died or are still bleeding.‖ Videocon‘s Dhoot holds heavy taxation responsible for industries‘ woes. ―Total tax incidence in India even now stands at around 25-30 per cent, whereas the corresponding tariffs in other Asian countries are between 7 and 17 percent,‖ he says. Poor infrastructure is another reason that seems to have held back the industry. ―Regular power supply is imperative for any consumer electronics product. But that remains a major hiccup in India,‖ says Ravinder Zutchi, Deputy Managing Director, Samsung.
Indeed, over 80 percent of the rural market in India remains irrelevant for the industry because of these reasons. But the fact remains that these problems are not going to be resolved in the near future. And the companies will have to factor them in when they draw new growth plans. Which they have now done. Shorter replacement cycles, especially in urban areas, also give companies cause for hope. Over the next few years, the topography of
the industry will likely change, with some companies gaining at the expense of others. Eventually, however, the market itself will grow, as rural markets evolve and companies create specific products for them.
4.3 The Threat of Retail: There is another imminent threat for the industry, the emergence of organized retail. ―World over consumer electronics is used as a loss-leader category to woo consumers,‖ says Ireena Vittal, Principal, McKinsey. ―Retailers give consumers huge discounts on these products to win over consumers, which, in turn, mean squeeze on margins.‖ Vittal points to another trend that is sure to hit the players, that of organized retailers launching their store brands. That, in fact, is already happening. Electronic bazaar has started importing air conditioners and microwave ovens from China and is selling them, under the brand name Koryo, at prices that are over 40 per cent cheaper than those of competing products. ―Initial response to these products has been encouraging,‖ says MD Kishore Biyani. ―We intend to import other products like TV and washing machines soon.‖ Mukesh Ambani‘s Reliance Retail is also said to be exploring such opportunities. In fact, the group is said to be in talks with some companies that neither have any manufacturing facility nor a strong distribution network in the country, but are keen on a presence here. ―There are companies that can take advantage of the free trade agreement (FTA) route and import their products to India and then, sell them through us without making any ground-level investments,‖ says a senior executive at the Reliance Retail. To be sure, companies like Hitachi, Sharp and TCL Holdings are already looking at exploiting the FTA route. ―We are looking at increasing our market share in CTV, LCD and plasma screen business,‖ says Prasun Banerjee, Vice President (Sales and Marketing) Sharp India. ―We would largely be importing these products, making use of the FTA route.‖
It is not that the players are oblivious to these challenges; they have no opinion but to look at the brighter side of the picture, which in India‘s case is its potential. ―The Indian market remains heavily under-penetrated, which is a big opportunity for all players,‖ says Zutshi.
Then, foraying into rural markets has a considerable cost component attached to it. Companies not only have to set up the basic infrastructure in terms of office space,
Even LG and Samsung, which are touted as having the largest distribution network in the country , have a direct presence only in 15,000 to 18,000 of around 40,000 retail outlets (for consumer durables) in the country.
Players admit that the increasing competition and new challenges will lead to another phase of consolidation with some losing and others winning. Early indications of that are already visible. The buzz in the market is that Samsung incurred losses (around Rs 80-100 crore) for the first time in 2005. Zutshi, however, refutes to this. ―Our profits did take a hit last year, but there were no losses.‖ Whirlpool India, Godrej appliances and BPL Ltd, companies making a comeback, aren‘t out of woods yet. LG‘s Kim says that in the next two to three years ―half the players will be pushed to fringes again.‖ Only two or three players will survive in each category.‖
And who are the players who will survive? Only those who are resilient, committed to the industry and Indian market and at the same time, are looking at being globally relevant, is the chorus.
Source: Business Today
They studied closely and picked up the salient features of the Japanese manufacturing and made themselves an expert in that. Their planning is very meticulous on the execution of the job in hand. The Koreans never shown any bias against India. The Americans and Japanese took their brand equity for granted. The Koreans did not. As a result of this they didn‘t make any value judgments of the Indian customers and introduced contemporary products. This way they got their brand noticed. Both L.G and Samsung have consistently launched contemporary models-be it fuzzi logic washing machines, flat screen TVs or microwave ovens-in step with their launch globally. Further power was added to this strategy of dazzling Indians with global products was their high advertising spends. L.G spent Rs 110 crores in advertising while Samsung
They practice this shibboleth with unusual vigor. Players like Whirpool and Electrolux that made a foray into consumer electronics around the same time that L. The Koreans always think big and take risks. and they outspend competition by a factor of at least two.spent Rs 80 crore in 2001. This ensures quick execution of the work. In 2003 L. When they take up a job they take it very seriously. But the important part is they quickly adapt their strategies accordingly. These spends have placed the Koreans in the class of some of the highest spenders in India such as Colgate. Dabur and Hindustan Lever. 61 . Their planning is meticulous. They are huge buyers of advertising so they exude through a lot of visible brand building. Maharaja.G spent Rs 225 crores and Samsung Rs 100 Crores. That means even the higher officials roam about the market to give boost to dealers and also to gather the first hand information on the current market conditions. They figure out quickly and very well what the consumer wants. The Koreans want to outdo the Japanese.S companies following the office marketing strategy the Koreans follow the principle of ‗Feet marketing‘. All Korean managers bring on board a monk like devotion to their task at hand. Such high voltage advertising has made the Koreans the biggest spenders in their businesses.G and Samsung did. They have culture sensitive workshops to ensure that the Koreans and Indians work well together. The Koreans believe that manufacturing is a key strength and that‘s why they eschew contract manufacturing and invest in their own manufacturing facilities around the globe. ITC. They don‘t start on a hunch. and the like) while the Koreans built capacity from scratch and gives them an edge over the competitors. Allwyn. They hedged bets by buying existing brands and capacities here (Kelvinator. This helps in knowing the ground realities better which results in a better strategy. which is now bearing the fruits. Unlike U. They bundle one product with another so as to promote the weaker one backed by the established product. That‘s why they have infused so investment. The Koreans have also started making a name for their ability to understand what customers want.
Kelvinator and Voltas. But this has also resulted in an over-supply situation in recent times as growth levels have tapered off.S counterparts who take their brand equity for granted.R. This shows their marketing tactics and their inclination towards the prelaunch test that they conduct before induction of each product in India.Krishnan at center for East Asian Studies of Jawaharlal Nehru University the insecurity element in the history of Korean comprising colonization. Also. with liberalization came a spate of foreign players from LG Electronics to Sony to Aiwa. especially in urban India. the Consumer Durables sector in India was restricted to a handful of domestic players like Godrej. and easy access to consumer finance have fuelled the demand for consumer durables in the country. The reason being the instability and lack of infrastructure of India to support these businesses. R. Together. they controlled nearly 90% of the market. Allwyn. Many business like chip manufacturing. acquisition of their country in the past tends them to form a marketing strategy that requires best of them. They have well-entrenched the consumers in India by sponsoring a number of premier events like cricket matches and others with a high TRP ratings. Then. humungous chemicals. Both rising living standards. According to prof. 62 . They were first super ceded by players like BPL and Videocon in the early 1990s. This research gives useful inputs to the Korean players and also times to adapt them for the new situation. the entry of a large number of foreign players means the consumer is no longer starved for choice. Though the Koreans are making huge profits in India they have not fully presented themselves in India. which they are operating in other countries has not found its way to India. who invested in brand-building and in enhancing distribution and service channels. BACKGROUND: Prior to liberalization. energy business etc. The Koreans always do a prelaunch market survey unlike its Japanese or U.
Chapter 5 Industry Analysis 63 .
Now the UPA govt.5. where they can get a better deal & credit as compared to the direct billing from the companies. For example the local kiranawala can go for the ‗cash & carry operations‘. The findings reveals due to supply crunch in the retail market. kirana stores with the intention to increase their vote banks & to protect the interests of some high profile personalities as Reliance announced its intentions of directly sourcing from farmers. The low access to banking facilities has been a cause of worry for the unorganized sector.1 PEST Analysis Political: There was a strong hue & cry with entry of the big organized retail chains being owned by the big corporate top guns like Reliance Retail & Aditya Birla group. & regulatory authorities. Even the new ally. Strong lobbying was done to protect the interests of local sabjiwala. can insulate the unorganized players from the adverse impact organized sector by providing institutional credit through banks. is more concerned to restrict the entry of the new players than to provide some incentives to the domestic kirana stores in the form of microcredit schemes & alik e. The finding of the Icrier came as a big relief to all the people who is directly or indirectly concerned with the overall gamut of the retail industry. The unorganized sector can also take the advantage of different retail formats by a little awareness & positive attitude towards the newly emerging trends in the market. The lobbying was so strong that the Reliance fresh has to shut down their operations in almost every nook & corner of Uttar Pradesh. the Samajwadi party is also not very rigid on the economic 64 . the govt. In the country of more than a billion people. thereby disinter mediating the middleman who is accused of escalating costs 1. After feeling the heat of the issue.. The govt. which has emerged with the clear majority in the Lok Sabha. Icrier to study the impact of the organized retail on the unorganized one. the Govt. both the organized & the unorganized players can comfortably exist & get their share of pie on the basis of competitiveness & by improving customer service to the end customer. has express their intentions of big-ticket reforms to be taken in the near future. which can be taken care of by the active participation of the govt. commissioned the economic think tank. The permissible entry of the FDI only in one branded outlet tries to limit the emergence of the positive & healthy competition & growth in this sector.
Economic: R. which will help the govt. On asking for the prospective exit. The personal saving rate in U. thus putting more pressure on the spending pattern.S is nearly zero & is likely to rise in the near future. FDI in the retail industry is limited to the single brand outlet where the maximum cap is 51%. 65 .S market is becoming more competitive due to the down turn in the consumption pattern.‖ One main reason for the exponential growth in the retailing sector is due to the shift in the consumption pattern of the U.S consumer. The bottom line is that the geographic mix of consumer spending growth will shift away from the U. Organized retail in the U. to sustain the economic growth rate of 9% in the near future. owner Subhiksha (modern retail format) predicts that the top three players in the industry will end up sharing the bulk of the profits. to carry out their operations at the earliest. On the contrary.reforms. it might be a good time to acquire something because there may be some consolidation.‖ Right now I don‘t see any reason to get out. But the bursting of the housing bubble & the depreciation of the dollar altogether creates a new picture where the U.S towards Asia which gives an ample opportunity to the big bosses of retail industry to showcase their energy & charisma.S was a driving force for the global economy & for the global retailing industry in particular which was fuelled by the external debt & the cheap availability of loans at very comfortable rates.Subramanian. which are likely to take in the next few months 2. Multi brands retailers like Wal mart & Carrefour are waiting for the green signal from the govt. Once they entered they will infuse fresh capital to the tune of billion dollars. They have strong financial muscles & even turnover of some retailers is greater than the GDP of some countries. During the last decade.S growth will come from exports rather than consumer spending. the ever-increasing growth of consumer spending in the U. particularly in Asia. which is also forcing the big retailers to seek opportunities abroad.
Apart from these issues. Even the retailers now want to play the safe game & are not interested investing money in the format which is not able to get enough footfalls & a stream of revenues. The rising cost of the real estate coupled with low conversion ratio has put a hole in the pockets of the retailers. AT Kearney. Reason the profits margins in convenience type of format is quite low & it has to be set in the prime locations to target consumers of mom & pop stores who believe in convenience. Reliance fresh & Spencer‘s are struggling with challenges of operating a convenience stores due to high operating costs & wafer thin margins. 66 . The look.says. Therefore the focus area for the retailers is to hunt for the customer. telecoms & manufacturing for a larger cash flow in retail in anticipation. also owner of Shoppers stop has dropped the launching of the convenience formats. one has to constantly move a notch higher above competition‖.-explains kalbag3. the main reason is the novelty factor. the second year witnesses a drop. trap him & keep him for the long lasting affair. Investment in Indian retail is a worth taking gamble which will pay off in the near future. Hemant kalbag.Moreover the business leaders of big conglomerate of Indian industry are getting the pulse of the retail market& are ready to recycle their excess cash flow from engineering. For example the Hyper City retail. the window display the freshness & the novelty factors are some parameters on which on player can outshine others in the same catchment area. ―The initial excitement dies out as more players come into fray & then growth steadies eventually. In a business like retailing where processes can be easily replicated. The current convenience stores format like Subhiksha. consumer & retail practice. part of K Raheja. the main threat which the retail industry as a whole is suffering from the commoditization of the products & services. The study reveals that while stores do better in the first year. It is viewed as a long-term proposition & the success for the first mover advantage will replicate in the retail industry too. & quick deliveries. the feel. The rapid expansion of the different formats in Indian retail industry has eventually put the customer in the perplexed state & he is not able to differentiate between the lucrative deals offered by the different retail outlets. express city.
business intelligence. technology will play an important role to enhance the experience of shoppers as well as retailers The critical activities that can be handled by IT are finance. vendor development & management. stores management. inventory. To meet these challenges the retail industry is heavily backing on I. strategies & management decision making. Retailers have already increased their IT spending by almost 15% in 2006. They want companies to look after the well being of the society & contribute towards it as per their efforts. As consumers embrace modern retail formats.distribution. point of sales systems. supply chain management & others. customer relations management. strategic merchandising & supply chain management.T to streamline its operations & to improve its bottom line in the low margin retail industry. They now feels the gravity of the situation & are ready to question the companies for their contribution towards the society in terms of better environment friendly products & processes. logistics.e. the conditions of the workers in the countries which manufactures & supply products & the impact of the products on them. the retailing industry is implementing solutions ranging from F&B operations to discount clothing.Social: The consumer all over the world understands the importance of the term CSR i. sales promotion. Here is the opportunity for the retail industry to tie the knot with I. accounting. allocating almost half of this increase to application software with a particular focus on tools that facilitate multi channel customer relationships.T. corporate social responsibility. merchandising & inventory management. In the last couple of years. branding. Even the consumer is ready to shell extra money from his pocket for the safe & environmental friendly products. Technological: The KRA‘s for the retail industry is to enhance the customer experience & drive revenues by managing costs & improving operational efficiency. implementing supply chain management (SCM) solutions to core business such as global sourcing . 67 . Shortage of real time information exchange between the stakeholders of the retail industry takes a toll on the quality of service.
68 . novelty factor & commodization of products & services. Today most retailers are working on a net margin of 3 percent. But thanks to spiraling real estate costs. the retailers are giving pink slips to their top level non performers‘ executives. changing consumer‘s attitudes & increasing competition has forced the retailers to think & act rationally. ―At today‘s prices of real estate. Depending on the size of the warehouse & the no.casting. The efficiencies are created with POS to warehouse to supplier integration with dynamic & replenishment of stock based on sale data. self-service kiosks. digital signage & self-checkout counters. compliance & management of point of sale(POS) data. They have started pruning manpower from the top to sustain their margins where they have been confronted by escalating real estate costs. Overall the picture of the retail is not looking very rosy in India as the increasing real estate costs. The future needs are converging as Indians retailers too are striving to create technology led supply chain efficiencies. of SKUs (stock keeping units). retail isn‘t a viable business.innovations. Retailers are experimenting with blue. a good supply chain system & replenishment model will start driving basic operational activities. occupation costs are double that figure. The management has justified the stand by calling it by another management jargon called ‗staff rationalization‘. With the focus shifting from driving top line growth to protecting the quickly depleting margins. It is assumed that merchandise systems & point of sale (POS) will trigger off the operations. optimizing revenue opportunities & customer intimacy.‖ -Kishore Biyani. strong competition. Future Group. Group CEO. & move on the adoption curve. transparency & visibility in financials & inventory. Thus the IT organization has to be agile enough to address the rising expectations. changing consumer behavior patterns. SMS based interactions. The life cycle of the retail industry seems to be squeezing as the big retail juggernauts are laying off of their employees & surprisingly enough this time the axe falls on the middle & top level executive.
courier dispatches.India‘s largest retail conglomerate Reliance Retail has initiated the ‗austerity drive‘. 69 . mode of travel. The company is going for some cost cutting measures including a check on unnecessary travel. use of stationery office. of times employees can have coffee or tea.26000 crores in its new retail venture & hired thousand of people with some astronomical salaries has now asked its format head to justify their respective employee strength & the role each employee has in the retail venture. use of cabs & the type of accommodation while on tour& the no. The company which promises to invest Rs. The answer lies in the vision. Finally the billion-dollar question is that can it is possible for all of them to co-exist in the retail ecosystem by nurturing & supporting each other to overcome difficulties & uncertainties & come up with flying colors. Even the top managers are asked to use AC Indica cars instead of luxury sedans on outstations tours. commitment & trust to think positively & act positively.
5.2 SWOT Analysis: 70 .
Technology-intensive industry. • • • • Weakness: Fast changing needs of consumer FDI norms LAND & PROPERTY Gap between supply and demand Only Indians can own property in India High stamp duty on property Lease alone costs 6%-10% of sales LABOUR LAWS 71 . Least saturated of all global markets studied. Availability of manpower. India tops the annual list of most attractive countries for international retail expansion Growing disposable income of the urban Indian consumer.Strengths: • • • • • Recognition as an industry.
Restricted working hour Hiring part-time workers difficult TAXES High corporation tax Opportunities: • • • • • India is amongst the least saturated of all major global markets in terms of penetration of modern retailing formats Players emerging across formats and product categories Rapid Expansion for all players The Shopping Mall formats are fast evolving Partnering among Brands. investors and malls Threats: • • • Barriers to FDI which limits entry of global players and limits exposure to best international practices Poor Infrastructure which restricts retail growth. retailers. 72 . franchisees. creates supply chain bottlenecks and increases wastage of farm produce 2008‘s economic crisis create some bad effect on sector.
Chapter 6 Micro Level Analysis 73 .
in survey the 69% are male respondents & rest of the respondents are female. Male are more concerned about the consumer durables & also more attracted towards these electronics. 74 .Here.
As it can be seen that the 17% of the respondents are coming in the age of 50. As generally the 31-50 age respondents are more settled down in their life so they are highly preferred the consumer durables.Age of Respondents Above 50 17% 18-30 29% 31-50 54% The age of the respondents can be seen that the most of the respondents are from the age of 31-50. 75 . & the rest of the candidates are having age of 18-30.
It can be said that the respondents who have replied kindly are having at least the knowledge of the industry. Area of living is considered because as the customers are preferable for any one buying area or not that is seen.As it can be seen that most of the respondents are responded which are in the category of the graduate. the Satellite & ambavadi area are more preferable for the consumer durables. Generally. 76 . Also the respondents are generally belongs to these particular areas from Ahmedabad.
of the respondents are salaried respondents. 77 .Most of the Respondents were salaried. Because of that the consumer durable survey can be mass segmented. As it can be seen that the 57 no. the students & the self-employed. While very less are the retired respondents. As here it is to be seen that not more of the female & the retired persons are interested in purchasing consumer durables.
According to respondents.) LCD Rank Characteristics Durability Price Scheme Technology Service 1 21 41 77 42 19 200 2 20 86 48 31 15 200 3 26 59 35 39 41 200 4 68 11 35 39 47 200 5 65 3 5 49 78 200 200 200 200 200 200 LCD No. definition of organized and unorganized retail outlet is: Organized outlet Avaibility of all brands at same place Manage by professional Presence at many places Large investment Very good infrastructure Running by Employees Unorganized outlet Single owner Only famous brand available Not all brands at same time Small investment Extra benefits to loyal customer Payment flexibility While purchasing consumer durables. as 1 for the Highest & 5 for the Lowest. which characteristics of following do you consider? (Rank appropriate. of respondents Service Technology Scheme Price Durability Rank 78 .
755 3.25 Rank 4 2 1 3 5 Here. Refrigerators Rank Characteristics Durability Price Scheme Technology Service 1 97 47 31 21 4 200 2 56 38 64 28 14 200 3 26 47 67 33 27 200 4 19 39 27 59 56 200 5 2 29 11 59 99 200 200 200 200 200 200 Refrigerator No. it can be seen that the most of the respondents have given preference to the scheme. Frequency of scheme is more in organized compare to unorganized.89 2. of respondents Service Technology Scheme Price Durability Rank 79 .Characteristics Durability Price Scheme Technology Service Weighted Mean 2.32 3. And it is because of promotional scheme given by organized outlet.785 2.
385 2.4th . Sceme is given the 2 nd most preferable while purchasing the refrigerator. Washing Machine Rank Characteristics Durability Price Scheme Technology Service 1 27 41 72 23 37 200 2 18 39 77 45 21 200 3 22 67 21 53 37 200 4 54 27 19 67 33 200 5 79 26 11 12 72 200 200 200 200 200 200 80 .84 Rank 1 3 2 4 5 Here.5th preferable are the price.175 3.465 1. it can be seen that the most of the respondents have given the preference to the durability while purchasing the refrigerator. Then the 3 rd . technology & service.Characteristics Durability Price Scheme Technology Service Weighted mean 4.135 3.
9 3 2.4th & 5th are the technology.59 Rank 5 2 1 3 4 While purchasing the washing machine it can be seen that the promotional schemes are given most importance by the respondents.services& durability.3 3.21 3. Price is to be given the 2 nd most preferable than the 3rd. Microwave Own Rank Characteristics Durability Price Scheme Technology Service 1 27 73 43 45 12 200 2 5 57 62 67 9 200 3 43 27 19 61 50 200 4 60 17 37 23 63 200 5 65 26 39 4 66 200 200 200 200 200 200 81 . of Respondents Service Technology Scheme Price Durability Rank Weighted Characteristics mean Durability Price Scheme Technology Service 2.Washing Machine No.
67 3.63 2.345 3. Technology is to be given the 2 nd most preferable Characteristic for purchasing the microwave oven.19 Rank 4 1 3 2 5 Price is given to the most important factor to be considered while purchasing the microwave oven.Microwave own No. & service is generally given the less preference while purchasing the microave oven. of Respondents Service Technology Scheme Price Durability Rank Characteristics Durability Price Scheme Technology Service Weighted mean 2.165 3. Laptop/Desktop Computers Rank Characteristics Durability Price Scheme Technology Service 1 21 32 17 94 36 200 2 12 51 37 62 38 200 3 63 67 49 13 8 200 4 67 29 26 17 61 200 5 37 21 71 14 57 200 200 200 200 200 200 82 .
515 4.Laptop/Desktop No.565 3. of Respondents Service Technology Scheme Price Durability Rank Characteristics Durability Price Scheme Technology Service Weighted mean Rank 2.675 4 2 5 1 3 Technology is the most important criteria while purchasing any laptop or any desktop.025 2.22 2. Mobiles Rank Characteristics Durability Price Scheme Technology Service 1 19 45 42 67 27 200 2 11 91 39 33 26 200 3 37 42 62 17 42 200 4 61 18 24 19 78 200 5 72 4 33 64 27 200 200 200 200 200 200 83 . Then the price is given the 2 nd most prefered & People do not give much importance to scheme and durability while purchasing compuers.
Mobiles No. the most important characteristic is the price that is to be preferred first.165 3.775 3. of Respondents Service Technology Scheme Price Durability Rank Characteristics Durability Price Scheme Technology Service Weighted mean 2. Then the least preferred is the durability while purchasing the mobiles.22 3.74 Rank 5 1 2 3 4 While purchasing mobiles.1 2. Music Systems Rank Characteristics Durability Price Scheme Technology Service 1 36 72 21 59 12 200 2 16 47 32 88 17 200 3 29 41 37 26 67 200 4 50 23 47 14 66 200 5 69 17 63 13 38 200 200 200 200 200 200 84 .
of Respondents Service Technology Scheme Price Durability Rank Characteristics Durability Price Scheme Technology Service Weighted mean 2. Air Conditioners Rank Characteristics Durability Price Scheme Technology Service 1 23 36 28 44 69 200 2 22 23 19 79 57 200 3 24 58 22 44 52 200 4 53 64 74 3 6 200 5 78 19 57 30 16 200 200 200 200 200 200 85 .83 2.495 Rank 4 2 3 1 5 While purchasing the music system. respondents are giving preference to the technology.67 2. & the least preference is to be given the services.Music Systems No.505 3.5 3.
Air Conditioner No. Camcorder/Digital Camera Rank Characteristics Durability Price Scheme Technology Service 1 18 41 33 82 26 2 17 29 52 66 36 3 29 53 37 32 49 4 67 34 40 11 48 5 69 43 38 9 41 200 200 200 200 200 86 . & the durability is the least prefered while purchasing A.C.52 3. of Respondents Service Technology Scheme Price Durability Rank Characteristics Durability Price Scheme Technology Service Weighted mean 2.965 2.295 2.435 3.785 Rank 5 3 4 2 1 Services are given to the most preferred out of all the characteristic while purchasing the airconditioners.
While the least prefer is durability as per the research.955 3.Camera No.24 2.005 2. 87 . of Respondents Service Technology Scheme Price Durability Rank Characteristics Durability Price Scheme Technology Service Weighted mean 2.79 Rank 5 3 2 1 4 The respondents are preferred the technology 1 st while purchasing the digital camera.01 4.
it is seen that the consumers generally their digital camera.years years years More than Product Catagory Here. oven in the time span of the 3-5 years. laptop. 88 .years .How frequently you change your consumer durables? Less than a year CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera 9 3 12 17 9 16 29 32 10 Time Duration 1-3 3-5 years 5-10 years years 94 23 59 38 49 112 82 41 32 72 36 37 112 107 53 59 103 91 14 96 72 33 28 19 27 23 67 More than 10 years 11 42 20 0 7 0 3 1 0 200 200 200 200 200 200 200 200 200 No. aircaonditioners.mobiles and television they replace within three years. of Respondents Less than a year .
89 . There are 56% that is majority of the respondents who are purchasing from both the organized as well as the unorganized sector. It is also found that there are also the respondents who are purchasing from unorganized sector which are 12% .From where do you prefer to buy consumer durables? Always Organized Retail Always Unorganized Retail Both As in the survey of the 200 respondents we found that there are 32% of the respondents who are always purchasing from the organized sector.
of respondents 80 60 Sales India 40 Croma NEXT 20 X-cite e-zone 0 product category 90 . as rank 1 is for highest) Organized Outlet Croma NEXT X-cite Unorganized (give name) Purchasing area CATEGORY CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera Sales India e-zone 120 100 No.What is your preference for the following : (Rank from 1 to 5.
of Respondents organized Unorganized Product category 91 .Preference towards Organized & Unorganized Product category CTV/LCD/PLASMA Organized 164 Unorganized 34 Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera 173 176 182 143 114 167 171 157 27 24 18 57 86 33 29 43 no.
Rank the given reason behind purchasing from the organized retail? (From 1 to 10. people also purchase from unorganized because of price and service. as 1 to be highest & 10 to be lowest) Preference of people for purchasing in organized retail Rank Reasons Availability of all brands After sales services Promotional Schemes Display Financial Schemes Status Sales person’s interaction Replacement time Proximity Home delivery 1 390 310 270 260 210 100 190 130 60 80 10 2 306 216 297 225 225 171 99 117 27 117 9 3 4 5 6 7 36 72 36 68 92 68 136 48 180 64 4 8 63 9 8 Weighted Prefer 10 Total ence 1 6 9 1 19 7 26 58 16 57 1 1380 1303 1293 1265 1187 1155 963 765 759 730 1 2 3 4 5 6 7 8 9 10 208 133 100 135 248 224 85 80 36 26 51 18 57 4 60 84 24 78 105 42 3 6 6 64 74 98 96 2 272 105 125 110 176 119 210 145 144 266 105 60 184 245 120 170 128 91 140 65 56 119 40 45 72 56 40 105 112 42 35 85 8 7 6 5 Weight 92 . In the category of mobiles and computer.Most of the respondents perchase consumer durables from organized outlets.
8 3.775 4.665 3. Preference of people for purchasing in Unorganized retail Rank 1 Home delivery of all products Availability of financial services After sales services Convenience Promotions Trusted brands (by providers) Trustworthiness in owner 371 154 266 217 147 168 77 2 258 306 138 102 156 102 138 3 110 160 75 170 165 145 175 4 104 192 76 108 124 88 108 5 48 54 123 81 87 126 81 6 48 24 78 42 42 76 90 7 16 17 25 43 39 28 32 Weighted Total Weighted mean Preference 955 907 781 763 760 733 701 4.905 3.535 3.505 1 2 3 4 5 6 7 7 6 5 4 Weight 3 2 1 93 . it can be seen that 1 st rank given to the avaibility of all brands in the all the categories.815 3. & home delivery is not given by the organized outlet so that the least prefered.Replacement time percentage of respondents proximity After sales services Home delivery Sales person’s interaction Financial Schemes Promotional Schemes Status Availability of all brands Display rank preference Here.
of respondents After sales services Availability of financial services Promotions Home delivery of all products Trustworthiness in owner Trusted brands (by providers) Convenience Rank preference Here the home delivery of the product the most important factor while purchasing form the unorganized retail outlet. Trustworthiness in owner is the main reason behind not purchasing from the unorganized outlet. 94 .No.
Do you prefer financial schemes to purchase consumer durables? Yes No
Preference for financial schemes
There are generally the 138 respondents who are positive towards the financial schemes like to take a loan & buy in the installments it means 31% of the respondents are not interested to take a loan.
Would you wait for available discounts for purchase consumer durables? Yes No
Approximately the 176 respondents are positive towards the discounts. While the rest of the respondents are not preferring the discount schemes.
100 90 80 70 60 50 40 30 20 10 0
Washing Machine Microwave Oven
during financial scheme
Mobiles CTV/LCD/PLASMA Air conditioner Music system
During promotional scheme Others
Generally people buy the mobiles & laptops when the promotional schemes are frequently available. LCD & music system & the oven are generally preferred from the festivals. Refrigerator & the washing machine buy during the financial schemes available. Digital camera is purchased during the occasions.
While the 72 customers are loyal to the promotional schemes & they are more attracted to the promotional schemes.Do promotion schemes change your brand preferences? Yes No Yes No As in the question of the promotional schemes change the brand preferences or not. in that 64% are brand loyal customers. 98 .
which brand you prefer for all consumer durables? Category LG VIDEOCON SAMSUNG BPL ONIDA VOLTAS GODREJ OTHERS CTV/LCD/ PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/ Digital camera 99 .If yes.
IFB. music system is preferred of the Bajaj. of respondents OTHERS GODREJ VOLTAS ONIDA BPL SAMSUNG Refrigerator Mobiles CTV/LCD/PLASMA Washing Machine Microwave Oven Air conditioner Music system Laptop/Desktop computer Camcorder/Digital camera VIDEOCON LG Product category Digital camera is generally preferred by the consumers company called Sony & canon.No. Laptop is preferred of the sony & dell etc. Voltas & Samsung air conditioners are preferred by the consumer durables. while the oven. & the Philips. 100 .
Chapter 7 Hypothesis Analysis 101 .
H1: There is significant relation between occupation and preference towards financial scheme. Preference of financial scheme Occupation YES NO Total 1 23 34 57 2 15 31 46 3 7 16 23 4 8 20 28 5 23 23 46 6 0 0 0 76 124 200 fe = RT x CT n 102 .Hypothesis: 1 H0: There is no significant relation between occupation and preference towards financial scheme.
CT = column total for the row containing that cell.083 34 35.346 103 .fe = expected frequency in a given cell.48 0.52 0. RT = row total for the row containing that cell.66 0. of rows – 1) (no.0352 31 28.74 0.34 0.0216 7 8.051 15 17. n = total number of observations X2 = Σ[(fo – fe)2 / fe] Degrees of freedom in a chi-square test of independence = (r – 1) (c – 1) = (no. of columns – 1) = (6 -1) (2 -1) = 5 fo fe (fo – fe)2 / fe 23 21.
068 0 0 0 0 0 0 5. Result: There is no significant dependence between occupation and preference towards financial scheme.52 1.127 X2cal = 12.48 1.20 17.743 23 28.071 Here.1656 Degree of freedom = 5 @ 95% confidence level Answer: X2tab = 11. 104 . H0 is accepted. X2cal < X2tab So.36 0.401 23 17.
Chapter 8 KEY FINDINGS 105 .
consumers prefer availability of all brands. 3 While purchasing LCD & washing machine. 106 . 12 Consumers are generally preferred the both organized & unorganized stores. 13 In ahmedabad city. & the lack of knowledge of the employees should not be there in organized retail outlet. 14 While purchasing from organized outlet. 16 After sales services & employees interaction should be improved here. their presence in major cities of India. special schemes are there. laptop/desktop. financial schemes are generally preferred way. 11 Refrigerators are generally changed in 5-10 years because of their durability. air conditioners. the organized stores like sales India & croma are the most preferred to purchase their consumer durables. professionalism etc. 4 5 6 Refrigerator is preferred by durability characteristic. 15 While purchasing from unorganized outlet. Technology is more important & preferred while purchasing the mobile. 10 LCD are generally changed in every 1-3 years of time span. laptop/desktop & Digital camera. Price is most important while purchasing the music system & the microwave oven.& camera in 3-5 years. Generally the consumers change their microwave oven.1 Organized consumer durable outlet means the large investment. 2 Unorganized consumer durable outlet is defined by the respondents by the unavailability of the all brands or the specific brands only available. after sales service. consumers prefer trustworthiness of owners & availability of financial services. 9 Consumers are generally changes their mobiles within one year. availability of all brands at one place. & display. generally most of the respondents are preferred the promotional schemes to purchase it. 7 8 While purchasing the air conditioners the services are the most important criteria.
20 Approximately 35% are respondents which are not the brand specific if they get the promotional schemes. 26 Next retail outlet is generally not preferred by the consumers or it is less preferred also the x-cite is less preferred brand outlet for consumers. 31 No one is providing all types of facilities like the organized outlet is generally giving except the sales India. 30 All the types of products in which all of the brands can available. 21 Most of the Respondents are generally not preferred the exclusive showrooms. 19 Approximately 80% of the respondents purchases consumer durables while discounts are available during festivals & promotional schemes. 27 The reasons behind the les preferred brand outlets are only the marketing & the advertisements are not done by planning. 18 More than 60% of the respondents are preferred financial schemes to purchase the consumer durables. 29 Unorganized outlets like the Vijay sales & all that are generally not preferred here in Ahmedabad due to the lack of awareness & trustworthiness. 23 Sales India & croma is also the retail outlet which is very famous & brand recall is there in the mind of the consumers.17 Availability of all brands at a time should be there in unorganized retail outlet. 107 . this type of store is of croma. 22 Sales India & Croma are the most relevant & preferred brand stores according to the consumers. 25 Consumers who are brand conscious. 24 Generally consumers are not preferred much of the retail outlets for the mobile & all little accessories purchase. they are generally not switch over the brand for the any type of financial or the promotional schemes. 28 E-zone which is sub brand of big bazaar is the attractive one due to the less prices & discounts are there.
Chapter 9 SUGGESTIONS 108 .
1. 7. 5. it is necessary to take measure steps to overcome the area of downfall in Unorganized with respect to Organized. So organized as well as unorganized retail should always improve services and update their technology. Customer considers quality as their first preference. The product is well aware and it is on top of mind of customer. 6. 4. 9. 3. so the Outlet should give more stress on this. A big showroom should have at least 2 such kind of person. More detailed customized services should be provided. The switching of customer from one brand to other brand is due to the bed after sell service in shop. 109 . Organized outlet should improve it‘s after sales service because its hits badly to the company‘s market share. As there is a bottle neck competition between Organized & Unorganized. 2. So they can target more market. The companies have to look into the matter of person hiring for in shop demonstration. 8. Organized retail outlet should try new dealer who have the potential. The training to in shop demonstration should be given at frequent time interval and feed back should be considered positively.
Chapter 10 Conclusion 110 .
The availability of all the products is the main criteria behind purchasing from the organized outlet. Purchase pattern of the consumers are differ from the product to product & store to store. While the last reason for purchasing from the organized outlet is only the display of all the products. Normally. Home delivery of all the products is the main & important criteria behind purchasing the unorganized outlet. 111 . While some of the consumers have dream for that sony vaio laptop. by product wise it differs. So generally. Generally sales India & croma is the most preferable organized outlet. Financial schemes are generally preferred for the purchasing consumer durables.In this study. the discount schemes are also preferred by the consumers. The study for the how frequently the consumers buy the products. or more than that. Promotional schemes are also preferred for the consumer durables by consumers. Like the laptop is preferred only of sony vaio by the most of the consumers. But generally consumers see the preference of the product & as per the product & the schemes. Convenience is the last reason behind purchasing the unorganized outlet. which are generally less than a year. Generally exclusive showrooms are not so much preferred for the consumer durable electronics. we found that the Organized & Unorganized retail outlet both are preferable. it differs. Some consumers are also brand specific for the some of the products.
H.1990.C. Kishore 2) Newspapers The Economic Times/Brand Equity The Telegraph/Metro The Business line / Brand line 112 .Kazmi ―It happened in India‖ by Biyani.Research Methodology methods and techniques .H.Bibliography 1) Books Consumer Behavior published by ICFAI Publications Integrated marketing Communications published by ICFAI Publications Consumer Behavior .AN APPLIED ORIENTATION By.by Satish Batra and S. Malhotra. BUSINESS RESEARCH METHOD – By-COOPER & SCHINDLER 10 TH ED.Kazmi ―It happened in India‖ by Biyani..H. Kothari. 2006.Naresh K. Kishore Kotler Philip.2008 Consumer Behaviour published by ICFAI Publications Integrated marketing Communications published by ICFAI Publications Consumer Behavior . New Delhi.‖ Marketing Management‖. TATA McGRAWHILL. Text and Cases.H.R.New Delhi. MARKETING RESEARCH.by Satish Batra and S. Pearson Education Inc. New Age International (p) Ltd. Text and Cases.
indiaonestop.pdf www.org/downloads/PPT/TheGreatIndianMarket.com/2010/02/..in/pdf/surveys_reports/consumer-durables-sector.cci.thehindubusinessline.pdf 113 .htm www.pdf www.ibef.cci.org/economy/consumermarket.htm www..ncaer.in/pdf/surveys_reports/consumer-durables-sector./2010021650300400.com/consumermarkets.3) Magazines The Business line Retail Biz Business Standard 4) Websites http://www.aspx www.
According to you what is organized outlet for consumer durables? ________________________________________________________________________ ___________________________________________________________________________ _____________________________________________________________________ 2. MBA CAMPUS. AHMEDABAD and presently doing a project on ―Comparative analysis of consumer behavior at organized and unorganized retail with special focus on consumer durables‖ We request you to kindly fill the questionnaire below and assure you that the data generated shall be kept confidential. Gender Age Educational Qualification : : : M F 10 th or below 10+2 or below Graduate Post Graduate and above Others(please specify) Area Occupation : : Salaried Retired Student Self Employed Housewife NRI 1.Annexure Dear Sir/Madam. According to you what is unorganized outlet for consumer durables? ___________________________________________________________________________ ___________________________________________________________________________ __________________________________________________________________ 114 . We are the students of GLS NRIBM.
From where do you prefer to buy consumer durables? Always Organized Retail Always Unorganized Retail Both 115 .3.) CATEGORY CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera Others Durability Price Characteristics Schemes Technology Service 4. While purchasing consumer durables. as 1 for the Highest & 5 for the Lowest. How frequently you change your consumer durables? CATEGORY CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera Others Less than a year 1-3 years 3-5 years 5-10 years More than 10 years 5. which characteristics of following do you consider? (Rank appropriate.
6. What is your preference for the following : (Rank from 1 to 5. as rank 1 is for highest) CATEGORY CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera Sales India Organized Outlet Croma NEXT X-cite e-zone Unorganized (give name) Purchasing area 7. Rank the given reason behind purchasing from the organized retail? (from 1 to 10. as 1 to be highest & 10 to be lowest) Organized Reasons Display Availability of all brands Status Promotional Schemes Financial Schemes Sales person‘s interaction Home delivery After sales services Proximity/convenience Replacement time Unorganized Rank Reasons Proximity/Convenience Trusted brands (by providers) Trustworthiness in owner Home delivery of all products Promotions Availability of financial services After sales services Rank 116 .
then give details about when you generally go for a purchase. Would you wait for available discounts for purchase consumer durables? Yes No If yes. As per your opinion what is to be provided for better services in unorganized retail? 1 _________________________________________________________________ 2 _________________________________________________________________ 3 _________________________________________________________________ 10. As per your opinion what is to be provided for better services in organized retail? 1 _________________________________________________________________ 2 _________________________________________________________________ 3 _________________________________________________________________ 9. Do you prefer financial schemes to purchase consumer durables? Yes No 11. CATEGORY CTV/LCD/PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/Digital camera At Occasions At Festivals During Financial Schemes During Promotional Schemes Others 12. Do promotion schemes change your brand preferences? Yes No 117 .8.
then which brand you prefer for all consumer durables? Category LG VIDEOCON SAMSUNG BPL ONIDA VOLTAS GODREJ OTHERS CTV/LCD/ PLASMA Refrigerator Washing Machine Microwave Oven Laptop/Desktop computer Mobiles Music system Air conditioner Camcorder/ Digital camera 13.If yes. Do you prefer the Exclusive showroom of a particular company for the brands you purchase consumer durables? Yes No 118 .
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