Assignment# 1: Case study

Marketing Management
Business Studies Department

You are required to write analysis of Hitachi Case Study in the context Five Force Model
and the Questions Discussed in Class.

Hitachi Limited, established in 1910 at Tokyo, was initially confined to producing heavy electrical
equipment and industry machinery. It then gradually diversified and expanded its product line by
covering a wide range of segments including IT, automotive, construction machinery, digital
media, railway, electronic, financial services and power systems etc. Hitachi launched its
business in India in 1998 and soon became a major player in both household and commercial
air-conditioning segments. The company’s marketing strategy was centered around provision of
eco-friendly and energy-efficient AC technologies to its customers.

In 2015, Hitachi India, diversified its product portfolios by joining hands with Johnson Controls
and thereby leveraging the core competencies, distribution channels, diversified product lines
and distribution and marketing channels of both the companies. The JCI-Hitachi product line
included different types of ACs, chillers, refrigerators, air purifiers and washing machines. The
joint-venture also invested to improve its after sales service.

In the RAC segment, JCI-Hitachi was more focused on Split ACs then window ACs, as latter
had a market share of 76 percent in the RAC market. The company promoted its inverter ACs in
its marketing campaigns, claiming to offer energy efficient and uninterrupted cooling solution,
designed according to the local weather conditions. Voltas was the main competitor of JCI-
Hitachi in the AC segment.

In the commercial AC segment, JCI-Hitachi’s most successful product was VRF. The ductable
range of ACs and chillers were also included in its product line.

JCI-Hitachi’s Spacemaker AC had a near monopoly in application-based AC segment.

However, the company was struggling in the Indian washing machine segment, due to low
demand of its self-cleaning washing machines. In the refrigerator segment, JCI-Hitachi had a
market share of 0.6 per cent and the company saw a huge potential for growth. The air purifier
market was another segment, which was expected to grow rapidly due to the worsening air
quality in India. Crompton Greaves Consumer Electricals, Usha International, Bajaj Electricals,
Orient and Havells India were some of the main competitors of JCI-Hitachi in the air purifier
market.

JCI-Hitachi also faced intense competition from companies like LG, Blue Star, Samsung, and
Whirlpool in the Indian market.

As the AC segment was dependent on seasons in India, the company could explore future
expansion in the other categories like Air Coolers, Water purifiers and Water dispensers.

Strategy to tackle threat of new entrants:

 Hitachi Conglomerate can take advantage of the economies of scale it has within the
 industry, fighting off new entrants through its cost advantage.
 Hitachi Conglomerate can focus on innovation to differentiate its products from that of
new entrants. It can spend on marketing to build strong brand identification. This will
help it retain its customers rather than losing them to new entrants.

Strategy to tackle the Bargaining Power of Suppliers:

 Hitachi Conglomerate can purchase raw materials from its suppliers at a low cost. If the
costs or products are not suitable for Hitachi Conglomerate, it can then switch its
suppliers because switching costs are low.
 It can have multiple suppliers within its supply chain. For example, Hitachi Conglomerate
can have different suppliers for its different geographic locations. This way it can ensure
efficiency within its supply chain.
 As the industry is an important customer for its suppliers, Hitachi Conglomerate can
benefit from developing close relationships with its suppliers where both of them benefit.

Strategy to tackle the Bargaining Power of Buyers:

 Hitachi Conglomerate can focus on innovation and differentiation to attract more buyers.
Product differentiation and quality of products are important to buyers within the industry,
and Hitachi Conglomerate can attract a large number of customers by focusing on these.
 Hitachi Conglomerate needs to build a large customer base, as the bargaining power of
buyers is weak. It can do this through marketing efforts aimed at building brand loyalty.
 Hitachi Conglomerate can take advantage of its economies of scale to develop a cost
advantage and sell at low prices to the low-income buyers of the industry. This way it will
be able to attract a large number of buyers.

Strategy to tackle the Threat of Substitute Products:

 Hitachi Conglomerate can focus on providing greater quality in its products. As a result,
buyers would choose its products, which provide greater quality at a lower price as
compared to substitute products that provide greater quality but at a higher price.
 Hitachi Conglomerate can focus on differentiating its products. This will ensure that
buyers see its products as unique and do not shift easily to substitute products that do
not provide these unique benefits. It can provide such unique benefits to its customers
by better understanding their needs through market research, and providing what the
customer wants.

Strategy to tackle the Rivalry Among Existing Firms:

 Hitachi Conglomerate needs to focus on differentiating its products so that the actions of
competitors will have less effect on its customers that seek its unique products.
 As the industry is growing, Hitachi Conglomerate can focus on new customers rather
than winning the ones from existing companies.
 Hitachi Conglomerate can conduct market research to understand the supply-demand
situation within the industry and prevent overproduction.