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scribd.php?u=http%3A%2F%2Fwww..There is a discernible shift in the consumer’s preference in favour of higher end .38.google.084 as on 2009) and this has led to paradigm shift in the purchasing behavior of the people here.*Choose auto to readcast without being prompted. technologically superior branded products.
.com/buzz/ post?url=http%3A%2F%2Fwww.facebook. the demand being spurred by increasing consumer awareness and preference for new models.com%2Fdoc%2F193697 57%2FConsumer-Durable-PDF%23source%3Afacebook><http://twitter. Competition has forced the companies to offer efficient after sales service and support and this. in turn..com/sharer.com/account/edit#sharing><#>Cancel <#> <#> Add a Comment Submit share: Characters: 400 <#> Share & Embed <http://www.Readcast this DocumentTransparent <#> Readcast Complete! Click send to Readcast! edit preferences <#> *Set your preferences for next time.com%2Fdoc%2F19369757%2FConsumer-Durable-PDF&mes sage=this%20is%20a%20secondaryresearch%20work%20revealing%20home%20appliances%20 market%20in%20India> <#> Add to Collections Download this Document for Free Auto-hide: off <#> 2009 AMIT KUMAR RECENT TRENDS IN THE CONSUMER BUYING BEHAVIOUR IN HOUSE APPLIANCES IN INDIA OVERVIEW India in its 62 years of journey ghas seen manifold increase in the income of its denizens (Rs.scribd.com%2Fdoc%2F19369757%20%23Readcast><http://www. has swayed customer preference for branded products.com/home?source=sc ribd.com&status=Reading%20%22Consumer%20Durable%20PDF%22%20on%20Scribd%20http%3A %2F%2Fwww. <#><#> Mayur Patil Mayur Patil Link account <#> Advanced <http://www. This shift is also because of the increase in manufacture of branded products and narrowing down of price between branded and non-branded goods.scribd.scribd.
breaking the shackles of the consumers regarding limitations of choices. Structure for Indian consumer market: Consumer classes Annual income 1996 2001 2007 Change The rich 215. Indian consumer durables market used to be dominated by a few domestic players like Godrej. double-income families and increasing consumer awareness are the main growth drivers of this industry. This report is an attempt to reflect the changes in the consumer buying behavior in the Indian Market especially in home appliances buying . These classes exist in urban as well as rural households both. India’s premier economic research institution. although the penetration level in rural area is much lower.2 416% The consuming class
. and Voltas. Consumers today are more indulgent in market place than their predecessors. For example a mobile phone is more of a need today then a want.Post liberasition there has been inundation of goods transcending the borders and the customer has a wider choice. Westernisation has influenced the psyche of the Indian customers to a degree. The CTV segment is expected to be the largest contributing segment to the overall growth of the industry.2 2 6.conditioners and washing machines. But post-liberalization many foreign companies have entered into India. In addition to them the young nature of population and easy finance options are also fueling the market and its dynamics.According to the National Council for Applied Economic Research (NCAER). dethroning the Indian players and dominating the market.000& more 1. CONSUMER CLASSES For the purpose of study I am using the classification given by NCAER . air. The major categories in the market are CTVs. The rising income levels. which is more relevant for ascertaining consumption patterns of various classes of goods there are five classes of consumer households. There has been shift in the definition of needs and wants. which differ considerably in their consumption behavior and ownership patterns across various categories of goods. Allwyn. refrigerators. ranging from the destitute to the highly Affluent. The rural market is growing faster than the urban markets. based on consumption indicators. Kelvinator. and consumption trends may differ significantly between similar income households in urban and rural areas.
3% from 31 million units in 2006 to 107 million units in 2001 The sectors which have recorded excellent growth ratesof more than 20 per cent in terms of quantity produced are Air Conditioners (25 per cent).2 21% FACTORS AFFECTING CHANGING CONSUMER BEHAVIOR CONSUMER BUYING PROCESS INDUSTRY CLASSIFICATION The consumer durables industry can be broadly classified as consumer electronics and consumer appliances.).8 61% Total 164.4 12. Plasma display panels and liquid crystal display TVs have registered an average growth of more than 250% 2006-07 and the trend is expected to continue.5 billion in value in 2006-07 and more than 7 million units in volume terms. The consumer appliances category can be further segmented as white goods and brown goods.6 90.7 199.5 54.8 180. DVDS (25 per cent) VCD/MP3 (20 per cent). Split ACs have been growing at a much faster rate than window ACsgrowth of 97% in the year 2006-07 and the trend is expected to continue. The sectors which have recorded high growth ratesbetween 10 and 20 per
.45– 215.0000 44 28. Color Picture Tube (23 per cent.2 3. Mobile phone production is expected to grow at a compound annual growth rate of 28.1 15.0 179% The climbers 22– 45.0000 54.6 per cent) Micro Wave Woven (27. Split Air Conditioners (42.3 per cent). THE KEY PLAYERS AND THEIR PRODUCTS MARKET ANALYSIS Industry sales were US$ 4.1 37% The aspirants 16– 22.000 32.3 65% The destitute Below Rs16.6 74.1 71.0000 33.
6 million units in 2004-05. The B&W TVh as recorded a negative growth of 16. Production of consumer durables: Production item unit 20032004 2004-2005 % growth Consumer durables/white goods
.1 per cent Watch (10%).7%) The Refrigeration Industry has reached 3. The VCD/MP3 industry has registered 20% growthand has achieved production of 8.16.6 mn units and 26.4 million units. the refrigerator segment had achieved a negative growth of 4.5 lakh units compared to 2. Thede-growth seen in the first quarter of the current fiscal has been mainly due to the value added tax (VAT) regime introduced in April.35 million units in 2003-04 to 1. Window Air Conditioners (18. as held by the industry representative. 2005. DVDPlayers are estimated to have grown by 25 per centin 2004-05 with the volume estimated to be 625000 units.color televisions (CTV) and refrigerators facing decline in production and salesduring the period.8 lakh units in 2003-04. Washing Machines (18. Overall.7 million units in the last yearwith a growth of 5 per cent.5 million units in 2004-05. 2005 has seen a little setback for the domestic consumer electronics and durables industrywith the two largest segments of the industry .1 per cent from1.3 per cent growthwith 3.25 million units in 2004-05 from 8.8 per cent). The first half of the year and the first quarter of the financial year.8%). The unorganized sector has occupied a major share in manufacturing and supplying VCD/MP3. The Indian Colour Television industryhas grown by 12.). Direct Cool Refrigerator (2.75 lakh units in 2003-04.4 mn units in 200405.1 per cent in 2004-05 by reaching 9. Washing Machinesis estimated to have grown by 18.7 per centfrom 3 million units in 2003-04 to 2.25 million units in 2003-04.6 mn units and 28. Frost Free Refrigerators (13.cent in April-March 2004-05 over the corresponding previous period are Color Television (12%).3 million units in 2003-04 to 22.8 per cent) The sector recording negative growthis B&W TV (.3 per cent in volume terms and two per cent in value terms during the period. But the Air conditioners and washing machines market have grown at the rate of 20% . The Air-Conditioners Industry has reachedat 1. Watch and clockhave registered growth of 10 per cent and 8 per centfrom 20.2 million units during 2004-05 with agrowth of 25 per cent from 9. clock (8 per cent). Some sectors which have recorded moderate growth of 0 to 10 per cent are refrigerators (5 per cent). Microwave ovens has grown by 27.9million units in 2004-05 from 3.
5 12.58 18.55 16 18.8 Direct cool Lakh units 29.0 B&W TV Lakh units 30 25
.51 2.25 25 Window Lakh units 7.8 Split Lakh units 2.85 5.68 42.33 8.Refrigerator Lakh units 37 38.1 Microwave ovens Lakh units 2.58 3.1 Color television Rs Crore 7000 7580 8.22 8.8 Air conditioners Lakh units 9.67 30.34 13.5 27.5 92.0 Frost free Lakh units 7.3 Consumer electronics Value overall 14500 156600 8.6 Washing machines Lakh units 13.8 12.0 Color television Lakh units 82.75 3.
at least for lower range consumers. making price the determining factor in increasing volumes. According to a working paper released by the Indian Council for Research on International Economic Relations (ICRIER). Newer variants of a product will help a company in getting the attention of consumers who look for innovation in products.7 Clock Lakh units 263 284 8.0 VCD MN units 7. Availability of newer variants of a product:Consumers are spoilt for choice when it comes to choosing products. Rise in the share of organized retail:Rise in organized retail will set the growth pace of the Indian consumer durables industry. Product pricing:The consumer durables industry is highly price sensitive.000 62500 25 Watch Lakh units 206 226 9. Availability of financing schemes:Availability of credit and the structure of the loan determine the affordability of the product. The growing Indian middle class is an attraction for companies who are out there to woo them.7 B&W TV Rs crore 482. For middle and upper range consumers.7 DVD Nos 50. technology and product features that are important. Sale of a particular product is determined by the cost of credit as much as the flexibility of the scheme. 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
.5 -25.-16. it is the brand name.2 8.0 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.55 361.4 16.
This is because the combined effect of rising input costs and a higher interest burden will negate the effect of such reduction. domestic consumption of refrigerators witnessed a decline between FY05 and FY08. From 3% of the total consumption in FY05. domestic consumption of refrigerators declined by almost 4% between FY05 and FY08. domestic production of refrigerators in the total supply remained at the same levels in the past three years ended FY08. On the demand side. Innovative advertising and brand promotion:Sales promotion measures such as discounts. Television Sets: Growth in sales FY07 witnessed the highest number of TV sets being sold when compared to the previous two corresponding years. while exports grew. As a result most companies come out with offers during this period to cash in on the festive mood. growth and trends During FY07. volume share of the single largest consumer durable was color TVs at 30%. Consumer Durables: Industry size. As per CMIE. Further. The share will grow with bigger players entering the market. the share
. This period will continue to be the growth driver for consumer durable companies. Washing machines and other assorted consumer durables captured a share in the total volume by 5% and 34% respectively. REFRIGERATOR: DEMAND AND SUPPLY SIDE DYNAMICS According to CMIE statistics. exports grew to7% of the total consumption in FY08.2011-2012. The imposition of anti-dumping duties on import of colour picture tubes will hit the manufacturing costs of CTVs produced in India. On the supply side. At 99% each in FY06-08. Festive season sales:Demand for color TVs usually pick up during the festive seasons. free gifts and exchange offers help a company in distinguishing itself from others.3% during FY07 when compared to a 21% growth in the previous year. followed by refrigerators and air conditioners at 18% and 13% respectively. the reduction in the general rate of excise duty (CENVAT) from 16% to 14% as proposed in the Union Budget for FY09 will not have any effect on the selling price of colour TVs. while imports climbed. growth in sale of TV sets was slower at 14.
Indian consumers have become value sensitive and are not much price sensitive as was the case earlier. According to CMIE. it was the smaller ones whose sales were negatively affected that eventually brought down the industry sales growth. Star TV.5% on the back of a comparatively higher growth of 11. whereas on the demand side it is the prospering middle class and consumerism which have led to changing demand patterns. No more the customers buy only to fulfill their basic needs and emphasise on savings itself. the industry witnessed a slower 10. MTV. The consumer durables segment witnessed a fall in production particularly for items where consumer preferences have shifted towards newer products. Foreign Direct Investment The net Foreign Direct Investment (FDI) inflows to India increased from US $ 22 bn in FY07 to US $ 32. The refrigerator industry posted a sluggish performance since the beginning of FY09 on the back of volatile steel prices.5% growth in the Mar 08 quarter compared to a substantial 17.5% during the previous fiscal.
. even then they are willing to buy the product. The first quarter saw a production growth of a mere 50 basis points to 2. iron ore etc. Karva Chauth is celebrated with more zeal and enthusiasm than the Valentine Day. Shifting in the consumption pattern coupled with rising input costs of steel. INDUSTRIAL GROWTH The industrial sector grew in moderation during FY08 at 8. Domestic consumer electronics companies together reported a subdued sales growth of almost 17% in FY07.18 mn units. the share of FDI in the electronic goods segment remained flat at 0. as imports slided. Sales of Consumer ElectronicsCompanies The consumer electronic goods industry underwent a slowdown during the last quarter of FY08.5% growth in FY06.of production reported a mere 100 basis point increase over FY05. as a result of which foreign companies were forced to give an Indian touch to them in order to succeed in India. on the back of a robust 40.4% growth in the previous corresponding quarter.3 bn in the following fiscal. may further affect the production levels of these goods. a tad lower than 9. While the larger companies reported robust growth in sales. McDonalds. The Indian consumers strictly follow their culture. CHANGING ATTITUDES OF TODAY’S CUSTOMERS Today customer likes to indulge in buying spree. tradition and values. as per CMIE. During 2007 and 2008.5% share in CY06. coming on the back of a 1. Pepsi. The country’s real GDP grew by 9% during FY08.6% in the previous fiscal. If they feel that a particular product offers them more value and its price is high. On the supply side newer variants of consumer durables on the back of technological advancements have flooded the market. Coca Cola India and many more had to Indianise themselves to flourish in India.2%.
It is clearly evident from the fact that despite many foreign brands being sold in India. Dell.The Indian consumer of today gives preference to features of a product rather than its brand name. Also consumers are availing credit or loan from banks and other financial institutions to fulfill their needs and wants. The trend that higher segment consumers only buy the top brands has also come to an end. Even after liberalization Indian companies and brands are doing very well.Toagreatextent the presence of heavy weight such as the pantaloons. This has led to the growth of shopping malls where shopping. Consumers are also availing the information available on net through various forums and websites.
. they also want better experience. They are also shifting towards industrial and services sector. nilgiris etc has given a huge fillip to the growing market by not only selling products but also the experience. The Indian consumers have shown another major change in their buying behaviour.com. The rural households have earned huge money due to price rise in real estate. Not often do we see any home with cars of the same brand or household products of the same brand. big bazaar. Though in a small way internet and and telemarketing have also caught the attention of the Indian customers.croma . entertainment and better facilities are all available under one roof. They have all the modern amenities at their home and their standard of living is fast improving. The rural Indian consumers are also showing signs of change. Amazon . The Indian consumer are much more inclined to the organized sector. They just don’t want availability of products. Customers are the ultimate beneficiary of the fierce competition in the market. The Indian consumers are spending thick and fast on premium and luxury products. Competition has reduced prices to a great extent and has forced the manufacturer to maintain product quality to sustain in the highly competitive market. There is a stiff competition in the Indian market today and it has become a buyer’s market from seller’s market. Raymond is still India’s largest textile company and Haldiram is doing well despite the presence of McDonalds and Pizza Hut. services and ambience. The use of credit card for shopping is a new emerging trend in India. It is reflected in their living standard and possession of all electronic gadgets and luxury cars. hence their purchasing power is increasing. etc have carved a good niche for them in the sector. The consumers today do not mind availing credit as when needed. So credit availability has become a key factor for determination of a buying a good. The consumers today are not confined to a single brand and prefer change rather than sticking to the same brand.
7) Indian consumers have developed a liking for foreign tours and holidays. For example mobile service providers provide lifetime option and free calls to other mobile users under a specific plan of the company. round the clock water and electricity supply. companies are providing many schemes and plans to attract customers. exquisite interiors. The changes include: 1) Launching of premium products by companies to fulfill requirements of high class consumers. For such consumers low fare or low cost carriers are available that provide air travel facility at a very affordable price. What is even more interesting is that the customer does not have to pay the amount in lumpsum. 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%. instead.30%. etc. The construction companies are fulfilling this requirement of consumers by providing them luxurious houses. he has the facility to make the payment in monthly installments according to his convenience. the companies have started shifting their focus towards rural India to capture untapped rural market. 4) Companies design their products on the basis of market segmentation so that they have products to suit every pocket and requirement. Coca Cola India and other FMCG companies. This has led to development of many travel agencies that provide a planned foreign tour at a reasonable price. club house. This improves the company’s credibility and helps to build its customer base. For example companies have provisions to send their technicians to repair the cars struck at highways or other outer locations due to technical failure or in case of a mishap. 9) Consumers of India want better housing facilities. gymnasium.MARKETERS REPONSE TO CONSUMER ATTITUDE With change in consumer buying behaviour the companies also made necessary changes in their marketing strategies. full time security. 2) Since purchasing power of rural India has increased. 8) Consumers of India have developed a tendency to save travel time. This has reaped huge benefits for companies like in cases of PepsiCo. Through this strategy electronic companies received very good response from the consumers in the recent past and were able to build a considerable market for their products. within the premises. 10) Indian consumers are increasingly becoming aware of the importance
. 3) Companies not only aim to sell their products but also aim to provide better after sales services to its consumers. 5) Due to sharp growth in the communication sector.
improving lifestyles. low running cost. rural consumers should be provided with easily payable consumer finance schemes and basic services. The urban market is a replacement and up gradation market now. To fulfill this need of consumers. 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. growth in disposable income. THE ROAD AHEAD The rising rate of growth of GDP. Purchase necessarily done only during the harvest. Rural India that accounts for nearly 70% of the total number of households. voltage etc. after sales services to suit the infrastructure and the existing amenities like electricity. has a 2% penetration in case of refrigerators and 0. 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. According to survey made by industry. leading to increased expenses due to transportation. 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. 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. Banks have also become liberal in their loan and credit policies. believed to be months `good forbu ying’. 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. power availability. Hence companies are making products to suit their health like low calorie. low fat food.of health and hygiene. should be converted to routine regular feature from the seasonal character. The attractive schemes of financial institutions and commercial banks
. festive and wedding seasons— April to June and October to November in North India and October to February in the South. 12) Indian consumer’s liking for credit is also increasing rapidly.5% for washing machines. 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. and rise in temperatures. 11) The need for internet is fast growing. offers plenty of scope and opportunities for the white goods industry. rural consumers purchase their durables from the nearest towns. the rural market is growing faster than the urban India now. Currently. While the consumer durables market is facing a slowdown due to saturation in the urban market. mobile manufacturing companies are providing internet access facility on mobile phones. Hence many financial institutions have come into existence in India and are flourishing.
India has moved up to the 39th most preferred retail destination in the world in 2009. At the same time. In the given scenario. Otherwise.authored by National Council of Applied Economic Research s (NCAER) Rajesh Shukla and Future Capital Research s Roopa Purushothaman. According to global real estate consultant. So.This has a direct bearing on future demand. Washing machines and refrigerators will also benefit from lower input costs. About 61 per cent of total urban income comes from households that can be classified as middle class—earning between US$ 1. The vigorous marketing efforts being made by the domestic majors will help the industry. It is expected to reach US$ 51 billion by 2010. The ability of imports to compete is set to rise. whose market size is quite small in India.493 and US$ 9.
. CB Richard Ellis. Reduction in import duties may significantly lower prices of products such as microwave ovens.are increasingly becoming suitable for the consumer. According to a report by McKinsey. The other factor for surging demand for consumer goods is the phenomenal growth of media in India.93 billion by 2015. urban markets will continue to fuel the Indian economy for quite some time to come. Indian incomes are likely to grow three-fold over the next two decades and India will become the world s fifth-largest consumer market by 2025. However. expenditure by the middle class accounts for the bulk of India’s urban consumer expenditure. Moreover. up from 30 per cent in 2007-08. India is likely to see rapid urbanisation. up from 44 last year. with around 45 per cent of Indians living in urban areas by 2050. the effective duty protection is still quite high at about 35-40 per cent. According to a study by the McKinsey Global Institute (MGI). The Internet being now used by the market functionaries that will lead to intelligence sales of the products. local manufacturing will continue to stay competitive. there will be some positive benefits in the form of reduction in input costs. It will help to sustain the demand boom witnessed recently in this sector.955 a year. Consumer goods companies are themselves coming out with attractive financing schemes to consumers through their extensive dealer network. The flurry of television channels and the rising penetration of cinemas will continue to spread awareness of products in the remotest of markets. Further.1 billion. a flood of imports is unlikely and would be rather need based. according to a study co. The turnover of the organised retail segment in India is pegged at around US$ 8. India s overall retail sector is likely to grow to US$ 419.
which can fuel their growth. as per Technopak Advisors The Indian consumer durables market the economic slowdown.com/forums/33563/entries/22981> to submit a copyright infringement notice.
Colour televisions have seen an increase in sales. a large number of hi-technology durables are expected to flood the US$ 4. LG.6 per cent of total retail to 26 per cent in the next five years. Haier and Videocon are among companies planning new product launches in the coming months CONCLUSION The Indian consumer remains one of the most upbeat globally. The consumer per cent rise in durables output in to a report by the Development Bank seems to be relatively untouched by durable goods output witnessed a 2.
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