Fore School of Management, New Delhi Group - 2 2 Marketing Management Project Contents Industry/Competitive Analysis: ..................................................................................................................... 3 Refrigerator Industry in India .................................................................................................................... 3 Industry Performance and Projections ..................................................................................................... 3 Market Share in Organised and Unorganised for Last five years and Future Projections.......... 4 Market Share of Top 5 Players in the Refrigerator Industry in Last 2 Years ............................................. 4 Indirect Competitors of Godrej Refrigerator ............................................................................................ 5 PESTLE Analysis ......................................................................................................................................... 5 Market Analysis: ......................................................................................................................................... 7 Segmentation, Targeting and Positioning: ......................................................................................... 7 Identification of needs being met: ........................................................................................................ 7 Performance Review ................................................................................................................................. 8 Past performance of the existing products and promotion of the chosen company .................... 8 Performance Review ......................................................................................................................... 8 Social Impact: ..................................................................................................................................... 9 Stock Market Performance: .............................................................................................................. 9 Promotion Techniques ....................................................................................................................... 9 Objectives: .................................................................................................................................................. 10
Fore School of Management, New Delhi Group - 2 3 Marketing Management Project Industry/Competitive Analysis: Refrigerator Industry in India Refrigerators are manufactured in India by predictability keeping in mind the tropical climate as more than 8 months in a year, 90% part of India faces hot humid weather. Now almost in all households refrigerators are used as they have become the necessity of daily life. It comes in the category of White goods. Till the 1980s, players like Godrej, Kelvinator and Voltas controlled almost 90% of the market. Earlier, the white goods sector was categorized as a luxury goods industry and was subject to oppressive taxation and licensing. The situation changed after the liberalization of the Indian economy in the early 1990s. Post-liberalization, a number of foreign companies entered the market and many domestic players also diversified into refrigerators. The Refrigerator market today is moderately regulated by-Bureau of Energy Efficiency; the statutory energy conservation body under the Power ministry has tightened energy norms by 2 levels. This implies that the 5 star models as per energy norms of 2013 will be 3 star models as per energy norms of 2014; Environmental Protection Agency; Indian Standards Institution (IS 1474-1959) among others. Heavy taxation in the country is one of the challenges for the players. At its present structure the 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 per cent. The Indian Refrigerator industry is highly competitive. The refrigerator market has more than 100 players present including global brands which provide wide choice to consumers and there is effective distribution network in both urban and rural areas. In India, refrigerators have the highest aspiring value of all consumer durables, with the exception of televisions. This accounts for the high growth rate of the refrigerator market. Rising household income, improving living standards, rapid urbanization, increasing number of nuclear families and environmental changes are growth drivers for the refrigerator industry. The Refrigerator industry has the highest demand penetration rate of 31% out of all the durables as of 2013. Industry Performance and Projections Currently, about 4 million refrigerators are sold in India each year. Although the market does contain a component due to replacements of old refrigerators, growth is dominated by the entrance of households to the expanding middle class. For 2007-2013, we relied on an estimate of sales provided by Euro monitor, a marketing research firm. We assume that although the refrigerator market will grow, it will grow at a decreasing rate than before. This maybe because of the threats including poor infrastructure, non availability of regular power supply which is an imperative for electronics products, cheaper imports from China and concessional duty imports under FTA from ASEAN countries. The refrigerator industry has grown at an average rate of 17.4% during 2007- 2013. The projected average growth rate during 2014-2016 will be 8%.
Fore School of Management, New Delhi Group - 2 4 Marketing Management Project
X axis shows the years and Y axis shows the market size of refrigerators in INR BILLIONS.
Market Share in Organized and Unorganized for Last five years and Future Projections The market share for refrigerators was expected to be around 45% in the organised retail market and is growing at a fast pace. The refrigerator and electronics industrys retail is increasing and so is the shift from unorganised to organised sector. In next 3 years, the market share in organised sector is expected to increase since customers not only have trust on organized stores but they also find it more convenient and easy to shop at such stores. Some of these electronic retailers are: Godrej Lifespace eZone Tata Croma Market Share of Top 5 Players in the Refrigerator Industry in Last 2 Years Major players in this industry are LG, Samsung, Videocon, Godrej and Whirlpool. 2011-2012 2012-2013
Fore School of Management, New Delhi Group - 2 5 Marketing Management Project Other Information: The refrigerators are broadly divided in to two categories- Direct Cool (DC) and Frost Free (FF) refrigerators. The DC segment occupies around 75 percent of total market share and rest of 25 percent occupied by FF models. LG and Samsung lead the frost free refrigerator market and it has a big market in the future. In the next 5 years, market share of Frost free markets is expected to go up. Indirect Competitors of Godrej Refrigerator Ri val r y among compet i ng f i r ms i s t he most power f ul of t he f i ve compet i t i ve f or ces i . e. , t he ongoing war between the firms competing in the same industry for gaining customer share in order to increase their revenues and profits. The competition is more intense if the firm pursues strategies that give it a competitive advantage over the strategies pursued by its rivals. Developing new strategies is easier than retaining the uniqueness of the strategies so as to gain a competitive edge over the rivals in the industry. Changes in strategy by one firm may be met with retaliatory countermoves, such as lowering the prices, enhancing quality, adding features, providing services, extending warranties and increasing advertising. Some of the key competitors are: Electrolux GE Kenmore Bosch Haier Marketing Mix
Company Product Price Promotion Place LG For Upper, Upper middle & middle class Average Advertisements, Celebrities Metros, Cities and towns. Samsung For Upper, Upper middle & middle class Average Advertisements, Offer on products. Metros, Cities and towns. Sony For Upper & Upper middle class High Advertisements, exhibitions, sponsoring. Metros & Cities. PESTLE Analysis Political Factor: - Political factors influence organizations in many ways. Political factors can create advantages and opportunities for organizations. Conversely they can place obligations and duties on organizations. Political factors include the following types of instrument: Legislation such as the minimum wage or anti discrimination laws. Voluntary codes and practices. Market regulations.
Fore School of Management, New Delhi Group - 2 6 Marketing Management Project Trade agreements, tariffs or restrictions. Tax levies and tax breaks. Type of government regime e.g. communist, democratic, dictatorship, and non-conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead governments introducing legislation to regulate the activities covered by the codes and practices. Economic factor: - All businesses are affected by national and global economic factors. National and global interest rate and fiscal policy will be set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organizational stakeholders behave within society. An economy undergoing recession will have high unemployment, low spending power and low stakeholder confidence. Conversely a booming or growing economy will have low unemployment, high spending power and high stakeholder confidence. Cheaper labor in developing countries affects the competitiveness of products from developed countries. Socio-cultural factor: - Social factors include the cultural aspects and its influences vary region to region. This includes Life style Age Religion Education Technological factor: - Technology is necessary for the success for competitive advantage and is provide power to globalization. This includes: R&D Activity Informational Technology New machines Legal factor:- Legal factors have huge impact on the business for develop new strategies. These factors can affect, how company operates, its costs, and the demand for its products. It includes: Political stability TAX and Trade Regulation Employment and Environment Laws Health and safety laws Consumer laws Environmental factor:-
Fore School of Management, New Delhi Group - 2 7 Marketing Management Project Growing awareness about climate change is affecting companies very hardly and it can be create new markets or destroy existing markets. It includes: Climate change & Weather Diseases Market Analysis: Segmentation, Targeting and Positioning: Segmentation: Based on geography: Urban, Semi urban, Rural Based on economy: Upper class, Upper-middle class, Middle class, Lower-middle class, Lower class Targeting: Based on geography: Urban, Semi urban. Based on economy: Middle class, Lower-middle class Positioning: Innovative, Customer-oriented Products Identification of needs being met: Our new product Cool-m-Cool is a refrigerator with separate space for water storage. Cool-m- Cool is designed for middle class and lower middle class customers. It has the water storage unit Aqua Kool (capacity 25 liters) at the top and the refrigerator unit below the water storage unit. The capacity of water storage unit has been kept to 25 liters by assuming 5 members in a middle class family, and 5 liters water consumption per person. The water will be put into Aqua Kool from top. There is a tap at the bottom of Aqua Kool to get the water. The concept behind a separate water storage unit is to provide better and efficient cooling to products kept inside refrigerator unit. Each family opens the refrigerator approx. 50-80 times daily just to drink water. This in turn affects the cooling process of the refrigerator. So, if we have a separate unit for water storage, there will be no need to open the refrigerator door for water, and this will result into better cooling. Cool-m-Cool has a capacity of 150 liters (excluding Aqua Kool). Thus, it will not take much space and it will be a perfect fit to middle and lower middle class people, who have less space. Cool-m-Cool has more space for vegetables and Fruits, and is equipped with Frost Free Technology. It also has an inbuilt stabilizer to avoid voltage fluctuation. We have planned to keep the price of the product low (in range of 9,000-10,000 INR).
Fore School of Management, New Delhi Group - 2 8 Marketing Management Project Salient Features of Cool-m-Cool: Separate space for water storage. Capacity 150 L + 25 L water storage space. Efficient cooling. More space for vegetables and Fruits. Frost Free Technology. Affordable price (Range 9,000-10,000 INR) In built stabilizer to avoid voltage fluctuation. Performance Review Past performance of the existing products and promotion of the chosen company Major products by Godrej: Appliances: Offerings in the refrigerator, washing machine, air conditioner and microwave oven ranges. Furniture: Furniture for home, office, educational institutions, establishments, labs, hospitals, shipyard FMCG: Cinthol, Good Knight mosquito repellent, Hair Color and Hair Dye. Real Estate: Residential, commercial and township developments. Agriculture: Animal feed, oil palm plantations, agrochemicals and poultry. Electricals and Electronics: Industrial automation, power distribution, compressed air solutions & green business commissioning. IT & Software Solutions: Solutions for engineering and service industry. Locks: Godrej secures almost every door in India. Since its inception in 1897 by Ardeshir Godrej, the name Godrej has become synonymous with trust, protection and integrity. Today, after a period of more than 100 years, his legacy continues to ensure a high degree of security to consumers with the implementation of latest technology and constant innovation. Precision Systems: Godrej Precision Systems, engaged in the Hi-Tech Aerospace Mfg. Activities, had its beginning in a small way, back in 1985, with development of critical, high precision spacecraft components, made out of exotic alloys. With the launch of Chandrayaan 1, we have added another medallion to the Godrej group. Security Solutions: Safes, lockers, banking automation products, electronic security systems, premises security & hi-tech doors. Performance Review Profit & Loss Rs. (Crores) Year 2013 2012 2011 2010 2009 Net sales turnover 6,964.32 5,688.22 4,415.81 3,458.02 3,295.18 Other income 218.23 191.77 215.63 367.05 394.6 Total income 7,191.31 5,840.39 4,589.68 3,797.93 3,571.94 Profit 291.61 195.26 249.57 168.21 98.07
Fore School of Management, New Delhi Group - 2 9 Marketing Management Project Social Impact: Godrej has been able to make a connection with people not only through their products but also through their initiatives. The top quality product and customer oriented products make Godrej one of the most trusted brands in India. Godrej has launched its product named ChotuKool for rural market in India. Godrej has a philanthropic arm that has built schools, dispensaries and a residential complex for their employees. Trusts established by Godrej continue to invest in education, healthcare and upliftment of the underprivileged. Godrej locks are the most trusted locks in India. Stock Market Performance: Year Mar'14 Mar'13 Mar'12 Mar'11 Mar'10 Mar'09 Stock value 836.8 772.2 477.25 389.9 256.2 126.1 From the above figures we can see that the stock prices of Godrej have grown at a healthy rate. This gives us an idea about its stable marketing model and a strong brand value of Godrej. Promotion Techniques E-commerce Godrej Bargainz: It was the first ever online sales promotion by an FMCG company. They collaborated with iBaya.com and provided entire range of Godrej consumer products such as soaps, detergents, toiletries, hair colors, shampoo, hair oil, fruit beverages, processed foods, wheat atta, packaged foods, bakery items and household insecticides. Consumer oriented sales promotion Buy one get one offer Free samples Vouchers and coupons Competition and Prize draws Discounts Refund and rebate Trade oriented sales promotion Retailers prefer price off as it guarantees increase of sales Display allowance, advertising allowance and Trade coupons. Buy back allowance: The agreed upon sum of money that is offered by a seller of an item or service should the purchaser either return the item or be unhappy with the service that was received. Advertising Celebrity Power: For example, Cinthol being endorsed by Hrithik Roshan. The Godrej EON range endorsed by Aamir Khan.
Fore School of Management, New Delhi Group - 2 10 Marketing Management Project Cabvertisements: Using cabs to advertise their product. Display of the brands product on hoardings. Rural Promotion Influencers, opinion leaders and local political leaders. Organizing Haats or melas NGOS: Example Nehru yuvak kendra sanghatan(NYKS), Vatavaran Collaborate with regional super stars. E.g.: Ravi kissen and Manoj tiwary to cater to the masses of UP and Bihar. Objectives: The marketing plan forms the basis for the introduction of an innovative product by Godrej, which is one of the well-known brands in India. The consumer durable industry as a whole is growing at a rate of 8% per year in India, whereas Refrigerator industry is growing at a much higher rate, approx. 15-18% per annum, in India. Also, the average income level in India is expected to triple by 2025, and as a result, urban and semi urban consumption expenditure is expected to rise 62% by 2025, compared to 43% in 2006. Our new product Cool-m-Cool is an innovative refrigerator by Godrej. This product is designed for middle class and lower middle class customers. As Godrej has always been known for its quality, innovative and customer- oriented products, Cool-m-Cool will help us to grow by leaps and bounds in the coming years. As India is growing fast from lower class to lower middle class and middle class, it is expected that the lower middle class and middle class sector will increase by 5 times by 2025. Also, Indian refrigerator market accounted for sales of 14 million units in 2013 and the sales volume is growing at a rate of 15-18% per year. Godrej, as the leading Indian brand in refrigerators, holds 4 th position with market share of 18%. Godrej has sold about 2.5 million units of refrigerators in 2013-2014 FY. With the launch of Cool-m-Cool, we are targeting to sell 3.2 million units by the end of this year and increasing our market share to 20%. The Frost Free technology at a lower price is also a plus point for Cool-m-Cool. We are expecting that smaller size with almost all facilities is going to attract middle class and lower middle class customers. Parameters 2014-2015 (Exp.) 2013-2014 Growth(Exp.) Sales Volume 3.2 million 2.5 million 28% Market Share 20% 18% 11%