A PROJECT REPORT ON
³Pricing and Promotion strategy of Videocon & Competitor Strategy´
Under the guidance of
Professor GANGADHAR HUGAR
MAYANK BASRA 09BS0001220
Videocon is a well known company. It is a Indian company which always focused on maintaining the highest international standards of excellence through quality, technology and innovation. For over a decade now, Videocon has been bringing the latest and very best in Consumer Electronics and Home Appliances. Successfully adapting the best of international technology to suit Indian needs, and crafting it to improve the quality of life ± as million of satisfied customers will agree. This tells the success story of Videocon. Sustainability is at the center of Videocon¶s¶ strategy. Being a great company Videocon always tried to improve people lives through its products but many a times due to changing environment or customer¶s mind the product doesn¶t goes so well as expected. Here the objective is to analyze current scenario of the market in consumer durable sector. And analyze that who is the main competitors of Videocon and what is the current position of Videocon in the market in view of the pricing and promotional strategies adapted by Videocon. In addition to it, determining the competitors strategy.
Videocon is the very popular and very reliable company in consumer durable sector. It was established in 1987 by late Mr. Nandlal Madhavlal dhoot. In those time it entered in the market with color and B/W Televisions and Washing Machines. The above table represent the Videocon¶s life history, basically talking about how they are graduated from manufacturers of color and B/W TV and washing machines to acquiring Phillips color TV plant and Electrolux India.
It is an ISO 9002 certified for quality.
PRICING AND PROMOTIONAL STRATEGY OF VIDEOCON
One of the four major elements of the marketing mix is price. Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotion. While there is no single recipe to determine pricing, the following is a general sequence of steps that might be followed for developing the pricing of a new product: 1. Develop marketing strategy - perform marketing analysis, segmentation, targeting, and positioning. 2. Make marketing mix decisions - define the product, distribution, and promotional tactics. 3. Estimate the demand curve - understand how quantity demanded varies with price. 4. Calculate cost - include fixed and variable costs associated with the product. 5. Understand environmental factors - evaluate likely competitor actions, understand legal constraints, etc. 6. Set pricing objectives - for example, profit maximization, revenue maximization, or price stabilization (status quo). 7. Determine pricing - using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts. These steps are interrelated and are not necessarily performed in the above order. Nonetheless, the above list serves to present a starting framework.
PRICING METHODS To set the specific price level that achieves their pricing objectives, managers may make use of several pricing methods. These methods include:
y y y y
Cost-plus pricing - set the price at the production cost plus a certain profit margin. Target return pricing - set the price to achieve a target return-oninvestment. Value-based pricing - base the price on the effective value to the customer relative to alternative products. Psychological pricing - base the price on factors such as signals of product quality, popular price points, and what the consumer perceives to be fair.
VIDEOCON PRICING STRATEGY:
In the cut-throat world of durables and electronics manufacturing, controlling the cost of production is vital. And that's where Videocon executives believe they have an edge over their competitors.Videocon has the largest distributed manufacturing base across India - 12 facilities. Compared to this, LG has two, Samsung has one, and Onida has two. Videocon's distributed capacity has ensured that it has gained ample experience in managing a complex supply chain - a fact that will come to its aid in its spread out ventures abroad. If we talk about the refrigerator segment, Videocon was the first company to introduce frost free refrigerators in Indian market. It has targeted the frost free segment since then and has product offerings 200L and 280 L sizes. While the 200L model is price competitive with 165 L offerings from Godrej and BPL, the 280 L model is aimed at premium segment in the Frost ±Free range. It has, however not targeted the 165 L segment in this range concentrating on higher sizes and multiple doors.
Videocon has entered into direct cool segment with two offerings:165 L refrigerator which is aimed at the price conscious buyer and 280 L model which is premium priced. The interesting pricing strategy followed by Videocon is that it has priced its 280 L DC model slightly less than its FF model. This way it hopes to make the DC buyer to switch to the FF model, keeping in mind the small price differential. Videocon has also ventured into the mobile phone segment with a slew of new launches. Videocon branded phones, which include Windows Mobile based smartphones as well, will be initially available in Tamil Nadu-Chennai, Andhra Pradesh, Pondicherry and Mumbai. From its pricing strategy, it is clear that Videocon is concentrating on the low to mid range segment where most of the volume in the Indian market lies. The line up of phones range from basic color screen phones with FM radio phones, single/Dual SIM to multimedia and smartphones. The prices range from a very affordable Rs. 1,600 to Rs. 18,500 for the top-end device from the company. With the company already having an extensive service and sales network across the country, it wouldn't be a problem for Videocon to offer fairly good after sales service for its phones. However, is the Indian consumer ready to move away from trusted brands like Nokia, Samsung, Sony Ericsson and the likes to a newbie like Videocon? That remains to be seen.
Videocon and Onida, the two groups fighting for the number two position in India's colour TV market, have strategies that vary completely, and entirely different thinking motivates their moves in the marketplace. While Onida has harnessed a single brand with sub-brands to do all its work, all riding on superior technology, the Videocon group uses a multi-pronged, multi-brand strategy. Videocon's plans for market dominance couldn't be more different from Onida's. The group talks multi-brand and multi-price. It has consciously adopted a multibrand strategy -- besides its own brand, Videocon, it markets the Sansui, Toshiba
and Akai brands. And you can expect some more names to be added to its brand wagon in the future. Videocon's strategy is two-pronged. It is planning to play serious ball at the low end of the market by tying up with a Chinese CTV manufacturer -- the name is still under wraps -- in order to offer prices of around Rs 6,000. This tack is also meant to combat another Chinese brand, Konka, which is targeting the Indian market with really low-priced CTV models.
To improve its association with young customers, especially for its upcoming ventures like DTH (direct-to-home) television, mobile telecommunication services and handsets, the Videocon Group of the Dhoots has come up with a new brand identity. The new brand logo is made of two green soft amoebic live brand ambassadors, Chouw and Mouw, which form a ³V´ together and carry the tagline, experience change. Both Chouw and Mouw have individual personality traits, based on their physical attributes. The new brand identity has been designed by Interbrand of Singapore. The rationale behind Videocon¶s brand evolution comes from our constant endeavour to listen and respond to the changing market dynamics in India and overseas. This marks the beginning of a sea-change for customers of consumer durable goods,´ says Vice-chairman and Chief Executive Officer K R Kim who played a key role in building LG as the largest player in the Indian consumer electronics market starting from scratch in 1997. ³The amoebic presentation represents a company that can adapt to new markets, consumers and environment. The change makes the brand come alive and look very consumer-centric,´ says Harish Bijoor, chief executive officer of Harish Bijoor Consults, a business strategy specialist consulting company.
Differentiation strategy adopted by other players:
LEADER ± LG Product localization is a key strategy used by LG. y LG came out with Hindi and regional language menus on its TV. y Introduced the low ± priced ³Cineplus´ and ³Sampooorna´ range for the rurak markets. y LG was the first brand to introduce gaming in CTVs. In continuation of its association with cricket, LG introduced the cricket game in CTVs.
CHALLENGER ± SAMSUNG Samsung considers µAfter Sales Service¶ as a key differentiator for Samsung products. In order to deliver prompt and easily accessible service, Samsung India has set up a widespread network of company owned as well as Authorized Service centres to service its customers. The Samsung Service Plazas, as the company owned Service centres are called, are first in the industry.
FOLLOWERS ± ONIDA AND PHILIPS ONIDA Onida¶s differentiation strategy is based on its brand based advertising rather than feature based advertising. They used its brand mascot µ The Onida Devil¶ and its punch line ³Neighbor¶s Envy Owner¶s Pride´ to create brand awareness of their product. Where its competitors were focusing on advertising of the features of their
products, Onida has concentrated only on their Brand. The µDevil¶ helped Onida gain substantial market share and brand recall among the customers.
Phillips Philips differentiation stategy is their ³Simplicity Led Design´. Phillips believes in the unity of the form and function. Their technology is easy to use. In Phillips¶s world, they are trying to improve the consumer¶s life. Philips is known for its customer insight and empathy. Therefore, their differentiation strategy included making technology simple to use.
NICHER ± SONY Sony is focusing on providing quality and premium priced products to its end customers and differentiating itself from the other players. high
CONCLUSION The way they are choosing to go global: through the OEM (original equipment manufacturer) route. Dictating the shift were new business realities - the march of the Korean chaebols in the global branded durables game and Videocon's own eroding market share at home. It's a conscious decision; otherwise they would have been extinct. (It can be done by taking the brand global or go in for intermediaries. Since building a brand abroad was tough, they decided to go in for intermediaries).