PROJECT REPORT ON
“THE CHANGING INDIAN CONSUMER
DURABLES INDUSTRY-AN OUTLOOK”
SUBMITTED TO: Prof. Samarendra Mahapatra
SUBMITTED BY: Roshan Kanoo (08DM076)
INSTITUTE OF MANAGEMENT AND INFORMATION SCIENCE BHUBANESWAR
This report is an outcome of mutual support and guidance of many persons towards whom I am indebted. I express my profound reverence and heartfelt gratitude to Prof. S.Mahapatra who suggested me proper guidelines towards the project and for his unconditional co-operation and kind support in preparing the report and doing the activities required for the same.
3 2.2 2.2 5 5.2 5.1 3.3 7 8 HEADINGS OVERVIEW Key Growth Drivers for Consumer Durables Major Hurdles and Challenges INDUSTRY ANALYSIS Industry Classification Success in the Industry would depend on the following factors Profiles of Key Consumer Durable players Opportunities and Challenges CONSUMER ANALYSIS Consumer Classes Changing Attitude of Today’s Customers Marketer’s Response to Consumer Attitude MARKET ANALYSIS Consumer Electronics Household Appliances PRODUCT ANALYSIS Television Consumer Electronics Market in India – CTV CTV Industry Post Liberalisation COMPETITION ANALYSIS Competition Overview India as an Emerging Force in Television Market Market Measurement and Forecasting THE ROAD AHEAD CONCLUSION PAGE NO.1 4.TABLE OF CONTENTS
SL. 1 1.1 1. 4 4 5 6 6 7 7 10 11 11 12 13 14 14 15 16 16 18 18 20 20 22 23 25 26
.1 5.2 2 2.1 2.1 6.3 6 6.3 4 4.4 3 3.2 3. NO.2 6.
breaking the shackles of the consumers regarding limitations of choices. air-conditioners and washing machines. although the penetration level in rural area is much lower. Post liberalisation there has been inundation of goods transcending the borders and the customer has a wider choice. Sale of a particular product is determined by the cost of credit as much as the flexibility of the scheme. The major categories in the market are CTVs.1. Availability of financing schemes: Availability of credit and the structure of the loan determine the affordability of the product.1 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. Kelvinator. There has been shift in the definition of needs and wants. The rising income levels. Westernisation has influenced the psyche of the Indian customers to a degree. dethroning the Indian players and dominating the market. Consumers today are more indulgent in market place than their predecessors. For middle and upper range consumers. OVERVIEW
India in its 62 years of journey has seen manifold increase in the income of its denizens (Rs. This report is an attempt to reflect the changes in the consumer buying behaviour in the Indian Market especially in home appliances buying. Indian consumer durables market used to be dominated by a few domestic players like Godrej. Availability of newer variants of a product: Consumers are spoilt for choice when it comes to choosing products. There is a discernible shift in the consumer’s preference in favour of higher end. technologically superior branded products. the demand being spurred by increasing consumer awareness and preference for new models. The rural market is growing faster than the urban markets. Newer variants of a product will help a company in getting the attention of consumers who look for innovation in products.
1. For example a mobile phone is more of a need today then a want. in turn. 4|Page
. at least for lower range consumers. But post-liberalization many foreign companies have entered into India. Allwyn. and Voltas. In addition to them the young nature of population and easy finance options are also fuelling the market and its dynamics. has swayed customer preference for branded products. it is the brand name. technology and product features that are important. double-income families and increasing consumer awareness are the main growth drivers of this industry. Product pricing: The consumer durables industry is highly price sensitive. The CTV segment is expected to be the largest contributing segment to the overall growth of the industry. making price the determining factor in increasing volumes. refrigerators. Competition has forced the companies to offer efficient after sales service and support and this. 38. This shift is also because of the increase in manufacture of branded products and narrowing down of price between branded and non-branded goods. The growing Indian middle class is an attraction for companies who are out there to woo them.084 as on 2009) and this has led to paradigm shift in the purchasing behaviour of the people here.
1. Threat from rivalry and competition poses a threat to domestic companies. Customer power with respect to availability of choice: The availability of a wide product line on account of most products being homogeneous. Festive season sales: Demand for colour TVs usually pick up during the festive seasons. especially global companies: The domestic consumer durables sector faces threat from newer companies.Rise in the share of organized retail: Rise in organized retail will set the growth pace of the Indian consumer durables industry. with similar features. With the advent of a horde of FM radio stations. Tapping this yet untapped and unorganised market is a major challenge for the Indian consumer durables sector. Customers have the choice of both domestically produced and imported goods. especially in urban areas has turned off the viewership from TV to a large extent. Rivalry and competition: Presence of a large number of players in the domestic consumer durables industry leads to competition and rivalry among companies. The share will grow with bigger players entering the market. radio sets have now substituted TVs. especially from global ones who have technologically advanced products to offer. This period will continue to be the growth driver for consumer durable companies. free gifts and exchange offers help a company in distinguishing itself from others.
. Potential markets remaining yet untapped: A large segment of the domestic market. poses a threat for companies operating in the consumer durables sector. Innovative advertising and brand promotion: Sales promotion measures such as discounts. mostly the rural market is yet to be tapped.2 MAJOR HURDLES AND CHALLENGES PLAGUING THE INDIAN CONSUMER DURABLES SECTOR:
Threat from new entrants. 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. According to a working paper released by the Indian Council for Research on International Economic Relations (ICRIER). Threat from substitute products/services: The domestic consumer durables industry is plagued by threats from substitute products. Easy accessibility to theatres/multiplexes. As a result most companies come out with offers during this period to cash in on the festive mood.
• Distribution and retail – With the rural and semi-urban markets opening up avenues for expansion.2. plasma display panels and liquid crystal display TVs registered an average of more than 100 percent growth in 2007–08 and the trend is expected to continue • Split air conditioners – Split air conditioners have been growing much faster than window air conditioners.3 percent from 2006 to 2011
. growing at 97 percent in 2006–07 compared to 32 percent growth for window air conditioners. flat screen TVs. the need to have a strong distribution network is crucial for companies to remain price competitive • Mobile phones – The mobile phone market grew at 29 percent in 2007–08 over the previous year. INDUSTRY ANALYSIS
2.1 INDUSTRY CLASSIFICATION
THE INDIAN CONSUMER DURABLES INDUSTRY CAN BE SEGMENTED INTO THREE KEY GROUPS CONSUMER DURABLES WHITE GOODS • Refrigerators • Washing machines • Air conditioners •Speakers and audio equipment KITCHEN APPLIANCES/BROWN CONSUMER ELECTRONICS GOODS • Mixers • Mobile phones • Grinders • Microwave oven • Irons • Electric fans • Cooking range • Chimneys • Televisions • MP3 players • DVD players • VCD players
ATTRACTIVE AREAS FOR INVESTMENT • High-end colour TVs – High-end. The market is expected to grow at a compound annual growth rate (CAGR) of about 28.
A.2 SUCCESS IN THE INDUSTRY WOULD DEPEND ON ADDRESSING KEY FACTORS
Market positioning and branding Addressing key customer requirements that act as demand drivers by proactive marketing and establishing strong brand association
Product technology Providing technologies that benefit the customer through low power consumption. WASHING MACHINES REFRIGERATOR. MOBILE PHONES VACCUM CLEANER WASHING MACHINES.T. TELEVISION VACCUM CLEANER. MOBILE PHONES.WASHING MACHINES.T. etc. distribution networks and brand recognition will continue to play significant roles
Attractive locations With raw materials forming a significant chunk of costs.V..V. REFRIGERATOR VACCUM CLANER.. production facilities located near ports to import cheaper raw materials could provide an advantage
Distribution and service network From saturated urban regions to lowpenetration rural areas and tier-II/III towns.2.V.REFRIGERATOR.MOBILE PHONES VACCUM CLEANER TELEVISION. DVD PLAYER AIR CONDITIONER GEYSERS.3 PROFILES OF KEY INDIAN CONSUMER DURABLES PLAYERS (key players and their product)
COMPANY VIDEOCON INDUSTRIES GODREJ WHIRLPOOL OF INDIA MIRC ELECTRONICS PANASONIC VOLTAS BPL LIMITED ELECTROLUX SAMSUNG HOOVER LG ELECTRONICS EUREKA FORBES SONY BLUESTAR BAJAJ ELECTRONICS NOKIA PRODUCTS REFRIGERATOR. low cost of operation. low service requirement. MICRO WAVE REFRIGERATOR. REFRIGERATOR. AIR CONDITIONER REFRIGERATOR.C. ELECTRIC FANS MOBILE PHONES
. T. WASHING MACHINES TELEVISION TELEVISION REFRIGERATOR.
and more than 18.000 Retail Outlets. Colombo (Sri Lanka). more than 2.
which will be marketed under its own brand. four modern manufacturing facilities and around 2. The Company has Representative Offices in Sarjah (UAE). • It has established its leadership in the field of commercial refrigeration equipment ranging From water coolers to cold storages. which comprises developing special Purpose products and comfort applications. 1932. 2006. business-specific clusters: air conditioning and refrigeration. The combined Sales during the Fiscal Year ended March 31. unitary products. Kitchen Aid. 1913. indoor air quality and chemicals. amounted to about Rs. mining and construction equipment. Bauknecht. under the Indian Companies Act. Estate.1.BLUESTAR
• Bluestar is the largest central air conditioning company with a network of 23 offices. The Company has a network of 38 Company-owned Retail Stores. The parent company is headquartered at Benton Harbour.000 employees. Whirlpool is the most recognized Brand in home appliances in India and holds a market share of over 25%.
. water management. The company Owns three state-of-the-art manufacturing facilities at Faridabad. The Company is one Of the largest privately-held diversified industrial corporations in India. ventilation and airconditioning. Michigan.
Godrej India was established in 1897. • It has tied up with RBS Home Appliances Ltd for the use of 640 service centres that Voltas has Across the country for after-sales services. electro-mechanical projects. Today. Roper. telecom towers. • Its operations have been organised into four independent. four Modern manufacturing facilities and around 2. In the year ending in March '06. 375 crores.270 million). materials handling.200 Wholesale Dealers. the annual turnover of the company for its Indian Enterprise was Rs. Riyadh (Saudi Arabia) and Guangzhou (China-PRC).000 employees Whirlpool was established in 1911 as first commercial manufacturer of motorized washers to the current market position of being world's number one manufacturer and Marketer of major home appliances.
• The company is engaged in the marketing of various consumer household and industrial goods • It manufactures the erection and commissioning of transmission line towers. textile machinery. 58. engineering products and international Operations. mobile telecom towers and wind energy towers. Laden and Agnes. According to IMRB surveys Whirlpool enjoys the status of the single largest refrigerator and second largest washing machine brand in India
WHIRLPOOL OF INDIA
• The company offers engineering solutions in areas such as heating. machine tools. Pondicherry and Pune. USA with a global presence in over 170 countries and manufacturing operation in 13 countries with 11 major brand names such as Whirlpool. refrigeration. building Management systems. the Company was incorporated with limited Liability on March 3. • It is also planning to introduce inverters and two new lines of business. • Bluestar is the largest central air conditioning company with a network of 23 offices.000
Million (US$ 1. • The company plans to increase production capacity by setting up a new manufacturing plant at Thane and is also looking to enhance its product range. • The company is planning to outsource manufacturing of gas appliances and water dispensers. Nairobi (Kenya).
split air-conditioners. has made the country’s consumer electronics industry highly dynamic. Technological improvements.A survey carried out by FICCI last year indicated that the consumer durable goods sector is all set to witness 12 percent growth this year. microwave oven (35 %). many high-end products such as LCD TV. 9|Page
. considered to be a good period for the industry. Fast growing product segments such as flat panel TVs. Rationalization of taxes. split air-conditioner (60%). washing machines (20 %). falling prices due to competition. But still. witnessed a 25 percent annual growth while the urban consumer durables market reflected an annual rate of 7 to 10 percent. which accounts for nearly 70 percent of the total number of households. seems to be a universal demand across the CE sector. like refrigerators. frost-free refrigerator (54%). growing disposable income and availability of easy finance schemes. home theatre systems – products entailing high aspiration value are likely to see a growth in consumption. split air-conditioner. The industry has been witnessing significant growth in recent years due to several factors. such as retail boom. The sectors which are projected to achieve ‘excellent’ growth rates of more than 20% in terms of units manufactured are air-conditioner (25%). Clearly.
Propelled by growing middle class population. LCD TVs. CE companies are re-working their strategies for the ensuing summer season. microwave ovens. changing lifestyle and rapid urbanization. Volume sales of washing machine will be driven by growth in fully automatic category during 2008-09 to 2011-12. DVD. have seen impressive growth. MP3. aggressive and innovative marketing and declining import tariffs have contributed to the strong growth. fully-automatic washing machine (35 %). fully automatic washing machines. The sectors which are expected to record high growth rates between 10% and 20 % are refrigerator (11 %) and colour TV (15 %). representing vast room for future growth. high end washing machine do not find place in the list of items covered by the Central Statistical Organisation (CSO) for calculating official data. These items. According to the survey. on the back of rapid economic growth. allied industry organisations and government agencies. DVD players.5 percentages point more than the growth registered last fiscal. The consumer durables sector is set to close the current financial year with 12% growth. the Indian consumer electronics industry is forecasted to grow at a rapid rate of 10% to 12% in the coming few years. 0. high-end flat panel TV (100 %) and DVD (25 %). India has an increasingly affluent middle class population that. The rural Indian market. microwave and washing machines have low penetration in the country. according to a Ficci survey. Spurred by a marked shift in consumers’ preference for highend products from premium brands floating superior technology. Plasma TVS. frost-free refrigerators. clearly. the aspiration to own premium lifestyle products among consumers has gone up. This will ensure manufacturers in India have a level playing field as against their counterparts in the import business. A cut in customs duty on inputs will enhance the manufacturing competitiveness of the industry by reducing cost and boosting demand and sales. Slim CRT TVs. The survey is based on feedback from the consumer durables industry. the consumer electronics goods. however.
certainly growing at a much faster pace than the direct-cool category. Companies not only have to set up the basic infrastructure in terms of office space.000 of the around 40. But that remains a major hiccup in India. Driven by young population. Regular power supply is imperative for any consumer electronics product. foraying into these rural markets has a considerable cost component attached to it. whereas the corresponding tariffs in other Asian countries are between 7 and 17 per cent. At its present structure the total tax incidence in India even now stands at around 25-30 per cent. Even LG and Samsung.
THE OPPORTUNITIES The rising rate of growth of GDP. demand for MP3 players and digital video appliances are anticipated to surge at double-digit rate in near future. The low penetration level of consumer electronics goods coupled with increasing preference for comfort and luxurious goods are widely attracting the foreign as well as domestic players to the industry.
2. 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. have a direct presence only in 15. The AC market in India is projected to grow at 30% to 35% for the coming few years. and the share of FPTV is projected to increase at robust rate in near future. This India.000 to 18. still buys black and white TVs and doesn't know what flat screens are. are anticipated to drive the Indian refrigerators market over the forecast period. the split between CRT and FPTV is around 97% and 3% respectively. manpower. but also spend on transportation for moving inventory. Currently. Also.000 retail outlets (for consumer durables) in the country. Poor infrastructure is another reason that seems to have held back the industry.
10 | P a g e
. which are touted as having the largest distribution network in the country.4 OPPORTUNITIES AND CHALLENGES
THE CHALLENGES Heavy taxation in the country is one of the challenges for the players. About 65 per cent of Indian population that lives in its villages still remains relevant for some consumer durables companies. Frost-free refrigerator sales. at least a large proportion of its constituents.•
The market for televisions in India is changing rapidly from the conventional CRT technology to Flat Panel Display Televisions (FPTV).
Accordingly. the climber. The urban market is a replacement and up gradation market now. improving lifestyles. believed to be months `good for buying’. 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. Consumer goods companies are themselves coming out with attractive financing schemes to consumers through their extensive dealer network. has a 2% penetration in case of refrigerators and 0. India’s premier economic research institution. the National Council for Applied Economic Research (NCAER). power availability. offers plenty of scope and opportunities for the white goods industry. There are five classes of consumer households. i. voltage etc. should be converted to routine regular feature from the seasonal character. leading to increased expenses due to transportation. income classifications do not serve as an effective indicator of ownership and consumption trends in the economy. The demographic shift in favour of a younger working population and the upward-bound income levels have been cited to 11 | P a g e
. Rural India that accounts for nearly 70% of the total number of households.
3. the consuming class and the rich. Currently. festive and wedding seasons — April to June and October to November in North India and October to February in the South. starting with the destitute. which is more relevant for ascertaining consumption patterns of various classes of goods. the consumer has been the poster-boy of the “India growth story”.5% for washing machines. The increasing popularity of easily available consumer loans and the expansion of hire purchase schemes will give a moral boost to the price-sensitive consumers. CONSUMER ANALYSIS
3. and consumption trends may differ significantly between similar income households in urban and rural areas. rural consumers should be provided with easily payable consumer finance schemes and basic services. and rise in temperatures. after sales services to suit the infrastructure and the existing amenities like electricity. has released an alternative classification system based on consumption indicators. While the consumer durables market is facing a slowdown due to saturation in the urban market. the aspirant. This has a direct bearing on future demand. ranging from the destitute to the highly affluent.1 CONSUMER CLASSES
Even discounting the purchase power parity factor. rural consumers purchase their durables from the nearest towns. growth in disposable income. The attractive schemes of financial institutions and commercial banks are increasingly becoming suitable for the consumer. These classes exist in urban as well as rural households both.e. Purchase necessarily done only during the harvest. low running cost.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. the rural market is growing faster than the urban India now. Consumer spending For long. which differ considerably in their consumption behaviour and ownership patterns across various categories of goods. According to survey made by industry.
based on numbers captured in the Index of Industrial Production. key drivers of durables sales in recent years. as sales of high-end consumer electronics such as mobile handsets and LCD televisions.
3. Pepsi. manufacturers such as Samsung and LG have seen a sharp increase in LCD TV sales in 2008. Karva Chauth is celebrated with more zeal and enthusiasm than the Valentine Day. The use of credit card for shopping is a new emerging trend in India. Future growth may. tradition and values. with the prospect of pay cuts and even layoffs beginning to materialise. Is the slowdown taking a toll on the Indian consumer? CONSUMER DURABLES: NO SLOWDOWN YET Sales of consumer durables do not yet show signs of a dramatic slowdown. categories such as television sets and washing machines recorded better growth in the previous two quarters. No more the customers buy only to fulfil their basic needs and emphasise on savings itself.support the view that. the Indian consumer will continue to splurge. Taking published production figures of consumer durables as a sales indicator. But this assumption is now being challenged. even then they are willing to buy the product. with about 1520 per cent of total durables sales relying on finance. The Indian consumers have shown another major change in their buying behaviour. even as the television segment overall notched up a 15. are erratic. IIP numbers may not fully represent ground reality.2 CHANGING ATTITUDES OF TODAY’S CUSTOMERS
Today customer likes to indulge in buying spree. Month-on-month production numbers this financial year. hinge on the availability of consumer finance. However. Overall production for categories such as washing machines. The consumers today are not confined to a single brand and prefer change rather than sticking to the same brand. are not captured here. however. MTV.
12 | P a g e
. McDonalds. 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.8 per cent growth. The Indian consumers are spending thick and fast on premium and luxury products. however. no matter what goes wrong with the global economy. Samsung reported a doubling of its Indian LCD TV sales in 2008. Star TV. while air-conditioners suffered sharp declines. The trend that higher segment consumers only buy the top brands has also come to an end. Not often do we see any home with cars of the same brand or household products of the same brand. refrigerators and televisions grew 7 per cent in 2008. Even after liberalization Indian companies and brands are doing very well. Helped by healthy replacement demand and price-cuts. as a result of which foreign companies were forced to give an Indian touch to them in order to succeed in India. Also consumers are availing credit or loan from banks and other financial institutions to fulfil their needs and wants. Raymond is still India’s largest textile company and Haldiram is doing well despite the presence of McDonalds and Pizza Hut. Indian consumers have become value sensitive and are not much price sensitive as was the case earlier. Coca Cola India and many more had to Indianise themselves to flourish in India. The Indian consumers strictly follow their culture. The Indian consumer of today gives preference to features of a product rather than its brand name.
This has led to the growth of shopping malls where shopping. the companies have started shifting their focus towards rural India to capture untapped rural market. The rural Indian consumers are also showing signs of change.They just don’t want availability of products. big bazaar. It is reflected in their living standard and possession of all electronic gadgets and luxury cars. etc have carved a good niche for them in the sector. they also want better experience. Competition has reduced prices to a great extent and has forced the manufacturer to maintain product quality to sustain in the highly competitive market. The Indian consumers are much more inclined to the organized sector. Through this strategy
13 | P a g e
. Consumers are also availing the information available on net through various forums and websites.3 MARKETERS REPONSE TO CONSUMER ATTITUDE
With change in consumer buying behaviour the companies also made necessary changes in their marketing strategies. So credit availability has become a key factor for determination of a buying a good. There is a stiff competition in the Indian market today and it has become a buyer’s market from seller’s market. This improves the company’s credibility and helps to build its customer base. They are also shifting towards industrial and services sector. The changes include: 1) Launching of premium products by companies to fulfil requirements of high class consumers. Amazon . hence their purchasing power is increasing. 5) Due to sharp growth in the communication sector. For example mobile service providers provide lifetime option and free calls to other mobile users under a specific plan of the company. croma. They have all the modern amenities at their home and their standard of living is fast improving. Though in a small way internet and telemarketing have also caught the attention of the Indian customers. 3) Companies not only aim to sell their products but also aim to provide better after sales services to its consumers. This has reaped huge benefits for companies like in cases of PepsiCo. 2) Since purchasing power of rural India has increased. 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. Dell. nilgiris etc has given a huge fillip to the growing market by not only selling products but also the experience.
3. The consumers today do not mind availing credit as when needed. companies are providing many schemes and plans to attract customers. Customers are the ultimate beneficiary of the fierce competition in the market. The rural households have earned huge money due to price rise in real estate. 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%. services and ambience. 4) Companies design their products on the basis of market segmentation so that they have products to suit every pocket and requirement. entertainment and better facilities are all available under one roof.com. Coca Cola India and other FMCG companies. To a great extent the presence of heavy weight such as the pantaloons.
11) The need for internet is fast growing. market volume.e.1 CONSUMER ELECTRONICS
The consumer electronics market consists of the total revenues generated through the sale of audio visual equipment and games console products designed primarily for domestic use. MARKET ANALYSIS
For the purpose of doing the market analysis the whole consumer durables market has been divided into two parts i. 9) Consumers of India want better housing facilities. After posting decelerating growth
14 | P a g e
. market value forecast. full time security.electronic companies received very good response from the consumers in the recent past and were able to build a considerable market for their products. Now analysis has taken into account the market value. Games consoles segment includes both home use and portable consoles. in-car entertainment systems. radios. gymnasium. To fulfil this need of consumers. What is even more interesting is that the customer does not have to pay the amount in lump sum. Consumer electronics and Household appliances. exquisite interiors. 10) Indian consumers are increasingly becoming aware of the importance of health and hygiene. The audio visual equipment includes CD Players. 8) Consumers of India have developed a tendency to save travel time. low fat food.. instead. 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. within the premises. mobile manufacturing companies are providing internet access facility on mobile phones. portable digital audio. Hence companies are making products to suit their health like low calorie. club house. home theatre. he has the facility to make the payment in monthly instalments according to his convenience. 12) Indian consumer’s liking for credit is also increasing rapidly. etc. and market volume forecast. For such consumers low fare or low cost carriers are available that provide air travel facility at a very affordable price. 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. The construction companies are fulfilling this requirement of consumers by providing them luxurious houses. televisions and video recorders. This has led to development of many travel agencies that provide a planned foreign tour at a reasonable price.
4. Hence many financial institutions have come into existence in India and are flourishing. hi-fi systems. round the clock water and electricity supply. 7) Indian consumers have developed a liking for foreign tours and holidays. DVD Players / Recorders.
4. Banks have also become liberal in their loan and credit policies.
Further strong growth is expected for the forecast period.822. to reach a total of 34.The Indian household appliances market has grown at a strong rate in recent years.5%. sales from Discount. the Indian consumer electronics market is expected to follow similar pattern in the forthcoming years up to 2013. generating 91.4%. an increase of 36.1% of the market's overall revenues. which is expected to drive the market to a value of $7. generating total revenues of $3. vacuum cleaners.9 million and $22. The performance of the market is forecast to decelerate.6 million and $23. Variety Store. The compound annual growth rate of the market in the period 20082013 is predicted to be 6. to reach respective values of $34.4% for the five-year period 2008-2013.Electricals and electronics retailers’ sales proved the most lucrative for the Indian consumer electronics market in 2008.8 billion in 2008.7 million. The market's volume is expected to rise to 52.492. the Indian consumer electronics market is forecast to have a value of $5. and General Merchandise Retailers generated revenues of $302 million in 2008.7 million units in 2008. and general merchandise retailers generated 7. the Chinese and Japanese markets will grow with CAGRs of 5. over the same period. MARKET VALUE The Indian consumer electronics market grew by 7.2% respectively. cooking appliances (including cookers.2 million units by the end 15 | P a g e
. variety store. and dishwashers. ovens. The Indian household appliances market generated total revenues of $4.2% between 2004-2008.5%. representing a compound annual growth rate (CAGR) of 12.4 million in 2013.727. over the same period.2% of the market's aggregate revenues.7% and 1.2 billion. washing appliances (including washing machines. to reach respective values of $18. The compound annual growth rate of the market in the period 2004-2008 was 9.2 HOUSEHOLD APPLIANCES
The household appliances market reflects the sale of six product sectors: refrigeration appliances (including fridges. representing a compound annual growth rate (CAGR) of 9.196.7 million by the end of 2013. Market consumption volumes increased with a CAGR of 13.6 million in 2008. The performance of the market is forecast to decelerate.2% of the market's aggregate revenues. In comparison. with an anticipated CAGR of 10% for the five-year period 2008-2013. to reach respective values of $26. microwaves. food processors and toasters). cooker hoods. over the same period.1% of the market's overall value. freezers and fridge freezers). room comfort and water heater appliances (which include air conditioning. with an anticipated CAGR of 6. In comparison. clothes dryers and washer-dryers). Comparatively. equating to 7. circulating and ventilation fans. Sales from discount.821.5% for the period spanning 2004-2008. The market value has been calculated using manufacturer selling prices.077. MARKET VALUE FORECAST In 2013.7 billion by the end of 2013. the Chinese and Japanese markets grew with CAGRs of 13. Electricals and Electronics Retailers’ sales proved the most lucrative for the Indian consumer electronics market in 2008. space heaters and water heaters).5% for the period spanning 2004-2008.4 billion in 2008.between 2004-2008.5 million in 2008.4% and 6% respectively.7% in 2008 to reach a value of $4. respectively.1% and 7. In comparison. The Indian consumer electronics market generated total revenues of $4. which is expected to drive the market to a value of $5.6 billion and $24.433.7 billion.5% since 2008.
4. equivalent to 91. the Japanese and Chinese markets grew with CAGRs of 1.
In comparison. which certainly have made the market. prizes. PRODUCT ANALYSIS
5.8% in 2008 to reach a volume of 34. deferred payment schemes and other incentives as promotional tools have been deployed by the players.2%.1 TELEVISION
INTRODUCTION In the last five years colour television industry (CTV) has witnessed drastic changes in the intensity of competition. which is expected to drive the market to a value of $7. the Indian household appliances market is forecast to have a value of $7. over the same period.4% in 2008 to reach a value of $4. The performance of the market is forecast to decelerate. an increase of 50. MARKET VOLUME FORECAST In 2013.Refrigeration appliance sales proved the most lucrative for the Indian household appliances market. MARKET VALUE FORECAST In 2013.7 billion in 2013. generating 30% of the total revenues.3 million.405 million in 2008. respectively.1% of the market's aggregate revenues. equivalent to 30% of the market's overall value. to reach respective values of $18. equating to 29.7% since 2008.7 million units. The compound annual growth rate of the market volume in the period 2008-2013 is predicted to be 8.7 billion by the end of 2013.4% and 4. an increase of 60. Exchange schemes.
5.445. In comparison.2 million units. free gifts.of 2013. with an anticipated CAGR of 10% for the five-year period 2008-2013. The compound annual growth rate of the market in the period 20082013 is predicted to be 10%. The compound annual growth rate of the market volume in the period 2004-2008 was 13.8 billion. MARKET VOLUME The Indian household appliances market grew by 11. sales of cooking appliances generated revenues of $1. price offs.1% of the market's revenue.9 billion and $30. representing a CAGR of 10% for the 2008-2013 periods. generating total revenues of $1.5%. Concomitantly the industry has been witnessing a 16 | P a g e
. the Indian household appliances market is forecast to have a volume of 52. MARKET VALUE The Indian household appliances market grew by 9. the Japanese and Chinese markets will grow with CAGRs of 0.4% since 2008. vibrant and pulsating.7%. Refrigeration appliance sales proved the most lucrative for the Indian household appliances market in 2008. Comparatively.7 billion. A major factor contributing to the growth has been availability of consumer financing schemes. cooking appliance sales account for a further 29.5%. The compound annual growth rate of the market in the period 2004-2008 was 12.
potential entrants. the television manufacturing industry has come a long way since the big black and white TV sets to the modern day ultra-thin Plasma and LCD TV sets. In the process the industry has evolved with products available at different price points at all levels.new scenario with a new market profile. plasma TV and golden eye technology are just a few examples. economies of scale in branding through international events and associations combined with a steady flow of capital. With the ever changing technology the Television industry has adapted itself suitably to cater to the changing tastes of the consumer. Akai. BPL and Onida has been challenged by MNCs such as LG. Philips. Phillips. The collective strength of the five forces determines the ultimate profit potential in an industry. With the advent of several local and foreign satellite channels. demand for CTVs has seen a rise. Sansui and Sharp. coupled with conscious shift towards flat colour televisions. Videocon. others threatening to do so. The last few years have seen a quantitative and qualitative change in TV technology and software. The television industry appears to have two clearly differentiated segments.5 FORCES MODEL Michael Porter’s Five Forces Model provides a robust and time-tested framework for analysing any industry. Sony. where profit is measured in terms of long term returns on capital invested (Porter. aggressive marketing strategy. Although the top players viz. companies need to constantly improvise. Companies are relooking at their strategies and are desperate for growth. innovate and customise their products. The elements of each of the above forces and the extent and /or effect of each element in the context of the television industry have been analysed and enumerated below. LG. technology. INDUSTRY ANALYSIS. AIWA. and threat of substitutes. This process was also facilitated by growth in production in the organised segment and domestic availability of multinational brands due to lowering of import duties and other liberal measures. Samsung. headphones. Panasonic. some in a perceptible way. distribution CUSTOMER POWER • Multitude of brands across price points — wide variety of choice for customers SUPPLIER POWER • Indigenous supply base limited — most raw materials are imported COMPETITIVE RIVALRY • Number of well-established players. In fact. The MNCs have an edge over their Indian counterparts in terms of technology. THREAT OF NEW ENTRANTS • Most current players are global players • New entrants will need to invest in brand. Since this is a technology driven industry. they have gained more volume due to increasing market size and higher penetration levels. Sony. 1980). Samsung and Onida have drastically reduced prices. The entrenched position of the Indian market leaders in CTVs’ like Videocon. reflected in the strength of the five forces (industry competitors. 3D 360 degree sound technology and e-mail TV. several new players entering
17 | P a g e
. Coloured cabinets. The industry is going through turbulent transformation. power of buyers and power of suppliers). Aggressive and innovative marketing strategies and technological advances have led to strong brand differentiation and prices.
5. •Increased local manufacturing.59 billion) by 2011. During this period.5 billion) in 2007.3%. the Indian economy was going through a balance of payment crisis.931. rising at a Compound Annual Growth Rate (CAGR) of 10. There was a huge demand for colour televisions all through the 80s. In 1984-1985. in 1985-86.13 crores ($6. changing and growing demands of the consumers made the industry competitive. Catering to a population of more than 100 crores people. 15% in 1988-89 and finally in the year 1989-90 it touched a rock bottom level of 5%. •Sporting events. including: •Growing consumer confidence due to rising disposable incomes.0 per cent from Rs. The history of the Indian television industry dates back to 1982. for the first time in the history of Indian colour television. the year when India hosted the Asian Games. Television continues to be the mainstay of the consumer electronics industry in India with the transition slowly occurring to newer technologies such as LCD and PDP.390 crores ($4. With the fast changing liberalization policies.6%.18. one saw a deceleration in the sales of colour televisions at -14. In 1991-92. It is predicted that the Indian audio/video consumer electronics industry will grow to Rs.
5. As a result of this. the prices of colour televisions skyrocketed due to the high import duties imposed on colour picture tubes.• Good technological capability • Many untapped potential markets THREAT OF SUBSTITUTES • Unbranded products and cheaper imports could enter the market Overall.26. the consumer electronics industry in India is poised for strong growth in the years to come.5%.2 CONSUMER ELECTRONICS MARKET IN INDIA: COLOUR TELEVISION
The consumer electronics market is one of the largest segments in the electronics industry in India. the sector is a dynamic one.3 THE COLOUR TV INDUSTRY POST LIBERALISATION:
The Colour TV industry in India has seen a gamut of changes in the past one decade as liberalization set in the Indian subcontinent making its market highly competitive and consumer driven. •Expanding distribution networks. such as the Cricket World Cup. However. •Easy financing schemes that are making purchases possible. The constant desire of the companies (domestic or international) to have a major share in the market often leads them to die many deaths which has became a hackneyed phenomenon in this sector of Liberalized India if the companies are not in able to cope with changing reforms and the changing tastes and preferences of the consumers.The growth will be aided by a multitude of factors. the colour television industry was growing at an astounding rate of 140. it fell to 68. 18 | P a g e
. with significant growth opportunities.
Samsung. life style and consumption patterns of the consumers have also changed. As a result of which the entrenched position of the Indian market leaders in CTVs’ like Videocon. SEZs •Qualified workforce •Untapped domestic market •Excellent supply base for glass and colour picture tubes. 15-20 years ago. This is because of the availability of goods and services at lower price. both in terms of brands and the items. This might be because of no financing facilities. This figure is even higher among the top eight metros at 21. availability of finance at low interest and in some cases zero interest and moreover the death of power of monopoly in many sectors because of the entry of the foreign players. it is entirely different. no credit card facilities and moreover demand side economic were prevailing. BPL and Onida has been challenged by the MNCs such as LG.com the market share of all the MNCs in the colour TV segment is about 65%. emergence of new companies (especially MNC’s). TV sets are still the fastest growing category among household durables.3% about one in every five home in these cities acquired a TV set in the last two years. started buying a flat or a car because of the availability of credit cards and easy financing facilities. There is a significant shift today.000 crores business industry. Like other third world countries. Producers have become price takers rather than price setters. which is approximately 250 million. introduction of state-of-the-art models. improved savings and rising standards of living. improved consumption. and also low penetration levels characterize this market.consumers in India moved from savings management to expenditure management. Some of the growth drivers because of which CTV market is growing fast are: •Increased awareness •Increase in disposable income •Emergence of nuclear families •Rising availability •Declining prices Many MNC and domestic companies are now making India as a manufacturing centre because: •Low cost skilled labour •Tax free zones i. Before liberalization in India. Customers had to buy what was available. Also. Most of the segments in this sector are characterized by intense competition.5% of Indian homes bought a TV set. AIWA. It has helped in widening the product base of consumer durables. Panasonic. Sony. more number of people have been travelling abroad after liberalization and there has been a distinct shift from joint family system to that of nuclear families. After liberalization the total scenario has changed.e. the consumer was at the mercy of the producer and savings management were prevailing in the sense that individuals saved and then consumed. Consumers in India with open markets on an average are enjoying lower prices. Some economic measures that have also played a role in this phenomenal growth are: •Custom duty on colour picture tubes (CPT’s) lowered to 20% from 25% •Abatement rates on TV sets have changed from 35% to 40% •Special additional duty on customs of 4% was done away with •Single rate of excise duty at 16%
19 | P a g e
. price discounts and exchange schemes. The industry is highly dominated by the foreign players occupying the top slots in the market shares. The biggest attraction for these players is the growing Indian middle class. The tastes and preferences. it was a Seller's market. But today.The foreign player entered the Indian market since the Indian economy increasingly interdependent almost over the last one and half decades. technological changes have helped the boom in the industry. From a recent data obtained from the Equitymaster. Akai. As per the estimates of the confederation of Indian Industry (CII) the Indian consumer durable industry is Rs 20. some in a perceptible way and others threatening to do so. It is a Buyer's market. There was absolutely no choice. availability of credit cards. people in India have started spending much more money on eating out. During the last two years 11. There is plenty of choice. Philips and Sharp.
and its products are used in 133 countries. 43"Projection TV and the Plano series of Flat Colour televisions. Toshiba had a presence in India since 1985 and was represented in India through their Liaison Office. The products were sold under the Optonica brand name. It is an aggressive marketer. In 2004 it reverted back to its premium positioning. The company was entered into a joint venture with Sharp Corporation. Japan .
LG India (CURRENT MARKET SHARE-23%)
LG Electronics rightly understood the consumer motivations to create magnetic products.a leading manufacturer of consumer electronic products to manufacture VCRs/VCPs/VTDMs. Sony has its distribution network comprising of over 7000 channel partners. Having understood the finer differences in consumer motivations. In India. established its India operations in November 1994.
Sharp India Ltd
Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and Electronics Pvt Ltd. The name was changed to Kalyani Sharp India in 1986. VCPs and audio products. COMPETITION ANALYSIS
Toshiba India Private Limited (TIPL) is the wholly owned subsidiary of Japanese Electronics giant Toshiba Corporation and was incorporated in India on September 2001. price them strategically. Samsung India acquired digital leadership in India by introducing its digital ready televisions like the 40" LCD Projection TV. The company also has presence across the country with 21 company owned and 172 authorized service centres. In line with the Global Digital Initiative of the Parent Company.
Sony India (CURRENT MARKET SHARE-21-22%)
Sony Corporation. the company was converted into a public limited company in the same year. 215 Sony World and Sony Exclusive outlets and 21 direct branch locations. 2001. it opted for sharp-arrow ‘reasons-to-buy’ differentiation over the ‘blanket-all approach’ taken by most of the other players.6. Sharp has a production base in 26 countries with 33 plants.
20 | P a g e
. The company manufactures consumer electronic goods such as TVs. VCRs. It focuses on low and medium price products.1 COMPETITION OVERVIEW
Samsung India (CURRENT MARKET SHARE-37%)
Initially the strategy of Samsung in India was to create premium image by emphasising global brand. Japan. position them sharply and keep making the magnetism more potent. After facing stiff competition from another Korean major. although it resulted in some loss of market share. Samsung also started playing price game. The company was accredited with the ISO-9001 certification in the month of February.LG.
21 | P a g e
. concentration and balance. • High-quality designs have made the company a leading player in the electronics and entertainment business. LCD Projectors.It also has a strong base in the semi-urban and rural markets. So focused is Onida on positioning itself on the premium. This has led to a state of diffused positioning for its brands. Some of HIL’s product range includes Semiconductors and Display Components. It also supports the sale of Plasma TVs. The strategy is aimed at further broad basing the product offering of the company. several other factors. high-tech plank that it is even planning to push its own envelope on obsolescence.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. LCD TVs. Onida and taken over Akai. the company manufactures home appliances such as refrigerators. and product differences need to be analysed to determine the extent of rivalry between the existing players. This entails providing more features at a given price vis-à-vis competitors. Because of reduction in import duties on CPT the cost advantage of Videocon is also on the decline.to flank the flagship brand Videocon in the low to mid priced segment. It has the widest distribution network in India with more than 5000 dealers in the major cities . The flagship brand Videocon has lost market share due to the presence of Sansui in the same segment. corporate stakes. Onida is a leading brand in Gulf market and also exports its models to Africa. it has at present multiple brands at the same price point. Like Videocon. essentially to fight against brands like BPL. which has largely dominated the top-end of the television market. plasma TVs and components into its fold. Bangladesh. • It has plans to acquire Daewoo’s consumer electronics businesses worldwide to bring LCD TVs.tail end brand or brands like Aiwa. it has also been able to hold its market share. Industrial \Components & Equipment. The world-class quality of Onida has enabled the company to make a breakthrough on the export front. Its popular devil ad although had engendered a strong emotional pull towards the brand. 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 indigenisation. much like Intel has been doing in its own industry. across multiple market segments. Hence it is facing rough weather and also trying to boost exports. It has taken over multinational brands to cater to un served segments. microwave ovens. Philips. fixed cost. Sri Lanka and Nepal.industry growth. Air Conditioning & Refrigeration Equipment to International Procurement of software.
Videocon (CURRENT MARKET SHARE-12%)
• It is the market leader in the consumer electronics and home appliances segments in India. The company plugged the gap by touting its digital technology. compressors. Videocon has always been a price player and has an image of a low price brand. air conditioners and washing machines. the move would also help it acquire a consuming partner for the recently-acquired Thomson’s picture tube business.
Mirc Electronics (ONIDA)
• The company commands strong brand equity among consumers largely owing to the success of its Onida brand. Smart Boards and DVD Camcorders. materials and components. It has technical tie-up with the Japan Victor Company. better known as JVC. It has also led to a cannibalisation of sales among these brands. Due to its multi-brand strategy. technologically it represented no advancement. like Sansui. Besides understanding the strategy adopted by different players.
Japan is a worldwide leader in the development and manufacture of electronic products for a wide range of consumer.. Many consumers in India buying their first television sets are looking at 21-inch and smaller CRTs as starter sets. This is due to a number of reasons. Panasonic Electric Works Co.7 million units by 2011. however. “India is emerging as a major force in the global television market in terms of domestic consumption as well as in production of sets”. traces its roots to the company started in 1918 by Konosuke Matsushita. Panasonic India plans to invest USD 100 million in its new plasma TV production facility in 2011. Ltd. The company currently has five production units in the country. set sales in India are experiencing strong growth.
22 | P a g e
. India’s television market is set to grow to 18. at Noida. The company has priced its plasma TV between Rs 24.1 million units in 2006. rising availability and declining prices. Chennai and Delhi. However. while there remain disparities in terms of the economic status of television buyers.5 billion in 2006.000 a year. with both domestic and overseas firms increasing their production bases in the country. up from $2.
Manufacturing on the rise
Television set manufacturing continues to rise in India.According to Panasonic The market potential for plasma TV was much greater in India than China. mostly because of increased awareness. Vadodara. even the more-expensive flat-panel sets. where consumers are looking for replacement sets or buying second televisions. and industrial needs. On the revenue side. where 70 percent of citizens earn less than $5. where consumers are attracted to 29-inch flat-face CRT TVs as alternatives to LCD-TVs because of their lower prices.2 INDIA EMERGING AS A FORCE IN THE TELEVISION MARKET
In India. buying a television is not an option for many consumers.Panasonic India (CURRENT MARKET SHARE-6%)
Panasonic Corporation based in Osaka. It has already sold ten such units this month.6 percent. It also launched the worlds slimmest. where there is a likelihood of flat panels gaining some market share. overall television sales will reach $4 billion by 2011. CRT televisions still have a leading position in the nation because the higher prices of Liquid Crystal Display Televisions (LCD-TVs) and plasma sets have discouraged their adoption in most parts of the country. CRTs still dominate market
While Flat-Panel-Display (FPD) televisions are gaining sales momentum in India.000 and Rs 30 lakh (for a 103-inch screen). 1-inch plasma TV called Vierra PDP Z1. rising at a CAGR of 9. Surprisingly. the demand for such high-end sets was increasing at a rate of 4-10 per cent in the country. It is the urban areas. Indians have shown remarkable interest in buying televisions. business. Gurgaon. expanding at a Compound Annual Growth Rate (CAGR) of 9 percent from 12. this carries over to the replacement market as well.
One might ask why this is so? The answer lies in the fact that the size of any market is based on the number of buyers who might exist for a particular marketing offer.And if we assume that six people constitute a household.To estimate the market potential for T. Forecasting helps in identifying and solving marketing and sales problems.
Factories in India are cropping up in less-developed regions because of tax breaks given by the government in order to improve the living conditions of citizens as well as to promote investments in television production in the country. this is the market . Consider the example of a product such as a T.V set . they are also used for setting performance standards. • Availability of a qualified workforce. • Other tax and financial support breaks. • An untapped domestic market.V sets in India. we know that 25% of Indian population is below the poverty line and hence will not be able to buy T. Besides. they too may not be able to afford it. we have about 142 million households Ideally.V set .But then . Further.• Low-cost skilled labour. most often. Forecasting exercise involve understanding market potential.we have arrived at 35% of the total Indian population to be the size of the total market. So. one is left with only 35% of the total population which is the real market that needs to be targeted. we can say that that the market potential for T. almost 40% of Indians are in low income group and given the prices of T. in other words. for a given environment. These buyers need to have three characteristics: · Interest in the product · Income to be able to afford the product · Access to the product Based on these characteristics .V sets.V sets is equal to the number of households in the country .
6. India has an excellent component supply base in terms of manufacturing facilities for glass and colour picture tubes so it makes it a good fit for companies striving to take advantage of this emerging market. 90-95% of the forecast is good.3 MARKET MEASUREMENT AND FORECASTING
Demand forecasting and sales forecasting are important for any marketing planning and control as it serves the basis for comparison over a period of time. we have to know the number of households .V sets Besides.Assuming that each household will have a T. Market potential is the limit approached by the market demand as industry’s marketing expenditures approach infinity. • Special economic zones that provide tax-free environments. market potential 23 | P a g e
. If the marketer knows the different tools and their application and is familiar with the market forces. it is increasingly felt that the forecast should generally be in a range rather than just having a single point forecast.
We know that at any given time there is only one level of industry marketing expenditure.9 per cent of those units in 2008. LCD TV shipments will surpass those of CRT TVs in India.V sets boomed in 1982-84 as Doordarshan started colour telecast.refers to the upper limit of market demand.6 per cent and PDP TV with 0. Sales Forecast refers to the estimates of future sales of company’s products. with Y/Y growth of more than 100 per cent expected for each of the next five years. In the above example of T. the digital broadcast (DTH. · Marketing demand as a function of industry marketing expenditure (assumes a given marketing environment) · Marketing demand in two different marketing environments This refers to a company’s share of the total market demand. the demand for T. Various research and report had analysed the trends and opportunities within the India market and predicts that by 2012. However. with a TV market that is projected to be 1. research finds that the India flat panel TV market is just at the beginning of a real growth curve.The demand for Colour T.5 per cent. it is subject to all the determinants of the market demand. Demand is always for a specific time frame. The market demand corresponding to this level is called market forecast. plus the determinants of the company’s market share. It is important to note that demand could be measured in physical or monetary terms. Growth will be driven by enhanced purchasing power. India's growing upper middle class is projected to be the greatest source of LCD TV purchasing 24 | P a g e
. went commercial and beamed popular soap operas. It is important for us to understand that there are three key terms involved in defining the market potential.V sets. An important dimension to be understood is also the fact that market demand is not a fixed number but a function of specific conditions. followed by LCD TV with 6. STB cable) transition as well as consumer awareness and affordability of flat panel TVs. IPTV. Company Potential is the limit approached by company demand as its marketing effort increases relative to its competitors.V sets will increase . as more income is generated in the Indian economy following higher economic growth rate. The absolute limit to this potential is the market potential and this will be so only in a monopolistic situation. These are · Market demand · Marketing expenditure by the industry · Defined market environment Market demand refers to the total volume that could be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing programme. CRT TV accounts for 92. India has the second largest population in the world and an annual GDP growth rate of more than 8 per cent from 2002 to 2012.3 crores (13 million) units in 2008. It is for this reason that it is called market demand function of market response function.
This has a direct bearing on future demand.
7. the effective duty protection is still quite high at about 35-40 per cent. The Internet being now used by the market functionaries that will lead to intelligence sales of the products. The attractive schemes of financial institutions and commercial banks are increasingly becoming suitable for the consumer. and rise in temperatures. However. 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. The flurry of television channels and the rising penetration of cinemas will continue to spread awareness of products in the remotest of markets. after sales services to suit the infrastructure and the existing amenities like electricity. So. leading to increased expenses due to transportation. rural consumers purchase their durables from the nearest towns. festive and wedding seasons — April to June and October to November in North India and October to February in the South. 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.power. power availability. LGE. Rural India that accounts for nearly 70% of the total number of households. rural consumers should be provided with easily payable consumer finance schemes and basic services. While the consumer durables market is facing a slowdown due to saturation in the urban market. has a 2% penetration in case of refrigerators and 0. The vigorous marketing efforts being made by the domestic majors will help the industry. Consumer goods companies are themselves coming out with attractive financing schemes to consumers through their extensive dealer network.
The other factor for surging demand for consumer goods is the phenomenal growth of media in India. believed to be months `good for buying’. growth in disposable income. The increasing popularity of easily available consumer loans and the expansion of hire purchase schemes will give a moral boost to the price-sensitive consumers. offers plenty of scope and opportunities for the white goods industry. According to survey made by industry. major brands like Samsung. low running cost.5% for washing machines. Sony and Philips and Indian local brands like Videocon and Onida are all focusing promotional efforts around LCD TV. Several Chinese brands are also targeting India with their first exports. should be converted to routine regular feature from the seasonal character. Meanwhile. THE ROAD AHEAD
The rising rate of growth of GDP. The ability of imports to compete is set to rise. It will help to sustain the demand boom witnessed recently in this sector. voltage etc. a flood of imports is unlikely and would be 25 | P a g e
. the rural market is growing faster than the urban India now. 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. Purchase necessarily done only during the harvest. Currently. Research analyses the favourable demographics where more than 23 Million Indians— greater than the entire population of Australia—will enter this demographic in the next five years. improving lifestyles.
a market research company revealed that Indians are "the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months. CB Richard Ellis. The Nielsen Global Consumer Confidence study. as per Technopak Advisors The Indian consumer durables market seems to be relatively untouched by the economic slowdown. up from 44 last year. The turnover of the organised retail segment in India is pegged at around US$ 8.955 a year. In the given scenario.5 per cent rise in durables output in the first quarter of 2009.03 billion Indian durables market in 2009. which can fuel their growth. expenditure by the middle class accounts for the bulk of India’s urban consumer expenditure. Moreover. a large number of hi-technology durables are expected to flood the US$ 4.
26 | P a g e
.rather need based. According to a study by the McKinsey Global Institute (MGI). there will be some positive benefits in the form of reduction in input costs.6 per cent of total retail to 26 per cent in the next five years.8 million units in JanuaryMarch 2009. Retail opportunity is slated to rise by about US$ 160 billion in India in five years. Indian incomes are likely to grow threefold over the next two decades and India will become the world's fifth-largest consumer market by 2025. Reduction in import duties may significantly lower prices of products such as microwave ovens. Further. It is expected to reach US$ 51 billion by 2010. India is likely to see rapid urbanisation. local manufacturing will continue to stay competitive. Colour televisions have seen an increase in sales. with around 45 per cent of Indians living in urban areas by 2050. At the same time. Haier and Videocon are among companies planning new product launches in the coming months
8. The consumer durable goods output witnessed a 2. About 61 per cent of total urban income comes from households that can be classified as middle class—earning between US$ 1. they see India as a strategic market. In urban India. conducted by Nielsen. Moreover. While most leading companies are cutting costs in the US and Europe. CONCLUSION
The Indian consumer remains one of the most upbeat globally. according to the figures released by ORG-GFK. Washing machines and refrigerators will also benefit from lower input costs.28 million washing machine market in India by the end of 2009.493 and US$ 9. according to a study by National Council of Applied Economic Research's (NCAER). According to a report by McKinsey. growing 2 per cent to 2. According to global real estate consultant. modern retail is likely to grow from the current 9. Otherwise. urban markets will continue to fuel the Indian economy for quite some time to come." In fact. LG. Whirlpool is on the expansion mode and is targeting a 22 per cent share of the US$ 423. India has moved up to the 39th most preferred retail destination in the world in 2009. according to a report by the Development Bank of Singapore (DBS). India's overall retail sector is likely to grow to US$ 419. and is launching a range of new products with an investment of US$ 4 million for the same. whose market size is quite small in India.1 billion.93 billion by 2015. Samsung. up from 30 per cent in 2007-08. it is widely believed that the Indian market will fuel the growth of multinational companies in the coming years.