Product Market Analysis

Colour Television

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Contents 
           History of Television in India Current Issues Future of Television Implications of Business Parameters of Television Segmentation Market Share General Industry CSFs Major Players & their growth Individual Marketing Strategies New Entrant¶s Strategies Comparative Positioning
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History of Television in India 

History of television
‡ ‡ ‡ ‡ ‡

In existence for three decades Until recently, all broadcasting was by government owned company (Doordarshan) Developed extensive network of terrestrial transponders Private broadcasting was illegal Introduction of colour television in 1980¶s (during 1982 Asian games)

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History of Television (Contd.)  

CTV was the driving force behind the consumer electronics boom of mid µ80s, which was due to a steady rise in GDP Between 1989 and 1992 the healthy demand growth got eroded due to: ‡ high excise, sales and other taxes leading to price increase;
devaluation of rupee in ¶91 leading to higher import costs; and ‡ temporary saturation of initial pent-up demand. pent‡
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History of Television (Contd..) 
Post-liberalization revival of CTV market Post‡ ‡ ‡ ‡ 
   

Rationalization of duty structures leading to lowering of prices Stable rupee Higher GDP growth Relatively lower inflation

Product life cycle got reduced considerably Introduction of satellite broadcasting by foreign company Led to increase in channel diversity Access to homes where cable (landline) was impenetrable Created fierce competition to enter the market
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Current Television Issues 
70 million homes (400 million individuals) have access to cable TV  27 Satellites cover the country  Widespread illegal cable operators
‡ Customer bases from 50 to 1000 ‡ 60,000 cable operators in India 

Satellite competition feared by government
‡ 150 million viewers of satellite programming, with largest variety of channels
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Future of Television 
Slow, steady migration towards digital transmission (over current infrastructure)  Widespread laying of fibre optic cable  Increase in homes with cable to over 100 million in 10 years  Increase in pay-per-view and customized programming pay-per Government must relax restrictions/threats against foreign and domestic competitors
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Implications for Business 
Current
‡ Poor infrastructure ‡ Corrupt government ‡ Surplus of skilled technical workers 

Future
‡ Improved infrastructure (potential to be sixth in world) ‡ Possibility of relaxed laws/bans on foreign competition ‡ Increased investment from outside sources

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Dominant Parameters of Television 
        Brand name Size Price Pricing scheme After sales service Picture quality Sound Number of channels Other features
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Segmentation - Size
Size
14´ 20´

Market share
13% 42%

Sub - segments
* Non-remote and remote Non* Non-remote (65%) and Nonremote (35%) * Conventional & FST * Non-remote (40%) and Nonremote (60%) * Conventional and FST * Both economy (<20000) and premium (>20000) models 25´,29´ & 32´ models

Characteristics
* 50% growth rate, fastest growing segment, second buy * Price sensitive

21´

40%

* Customers ready to pay for extra features * FFST models available in this range

>25´

5%

* Quality conscious buyers * Innovative features e.g. net 10 tv,flat tv

Segmentation - Price 
Price
‡ Low ‡ Medium ‡ High Rs 8000-12000 (35%) 8000Rs 15000-20000 (60%) 15000Rs 25000-150000 (5%) 25000-

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Source : www.IndianTelevision.com

Market Share
ra
BPL Videocon Onida LG Aiwa Samsung Philips Sony Sharp Akai Thomson Others

Market hare (% )(FY00)
20.3 19 13 11 10 9 5.5 3 3 2 2 2.2
Source: www.indiantelevision.com
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Source : www.IndianTelevision.com

General CSFs of the Industry 
Televisions form about 35% of the Rs 110 bn Indian consumer durable market
‡ Under Intensive Competition, the marketing strategy adopted to circumvent competition becomes the deciding factor for survival ‡ Tapping into all possible segments and price ranges thereby spreading the risk (portfolio) ‡ True economies of scale are achieved when plant capacity reaches at least 2 million units per year; this is larger than the size of Indian CTV Market ‡ Export markets should be a viable options for domestic players
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General CSFs of the Industry 
In view of the growing convergence the Indian marketers should have to look for better product features.  Indian market is highly price sensitive. So, increased pressure due to competition and overzealous capacity creations has resulted in lower margins. The fiercest players tackling the price front well will have a price related CSF. CSF.  The high import duties on raw materials (CPT) in India (import duty is 42%) have given more challenges to meet.

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Major Players
BPL ONIDA PHILIPS VIDEOCON
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Market Penetration
Penetration of Colour Televisions per thousand households

Years 1989-1990 1992-1993 1993-1994 1995-1996

Urban 123 160 178 212

Rural 9 16 19 26

Source : www.IndianTelevision.com

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Demand Growth
Supply scenario(figures in 19991997-98 1998-99 2000 mn nos) Demand-Domestic Export Supply Surplus 2.65 0.15 5.5 2.7 3.5 0.25 6.3 2.55 5 0.35 7.1 1.75
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Source : www.IndianTelevision.com

Export Growth
Co lo ur Televisio n Expo rts in India

Years 1996-1997 1997-1998 1998-1999 1999-2000

Growth 1.97 million 2.4 million 4.4 million 5.7 million
Source : www.IndianTelevision.com
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Comparative Analysis
Net Net Growth Profit Sales (Rs Bn) (%) (Rs Bn) 30 12.5 1.5 20.15 4 1.07 7.97 16 0.46 17.45 4 0.28

Company Name Videocon BPL Onida Philips

Year FY 2000 FY 2000 FY 2000 FY 1999

Source : www.IndianTelevision.com

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Capacity

Company BPL Videoc on Onida Others Total

Capac ity 7, 30,000 8,50,000 3,00,000 2,50,000 21,30,000

Source : www.IndianTelevision.com

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Product: Salient Features
BPL  Available sizes: 14´ ± 29´  New available models ± Evelux, Digital BPL Evelux,  Collaborations with Sanyo, Toshiba, Harris Communication  Available latest technology QPF and Matrix  Company ISO Certified  Damaged product replacement under warranty period

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Product: Salient Features
ONIDA 
    

Available sizes: 14´ ± 29´ Two new models ± Candy and IGO Servicing professionals trained from JVC Japan Growth in revenue 33%, rise in net profit 38% (Q1 FY00) Earned exports 78 mn (INR) Damaged product replacement under warranty period

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Product: Salient Features
PHILIPS 
Available sizes: 14´-32´ 14´ Two new models available: Match line series and power vision  ERP system implemented  CRT, LCD technology adopted in Monitor, Speech Recognition System and Security System  Incurred a loss of 40.5 cr instead of reducing operating cost from 5.5 ± 3 %  After warranty Services at nominal cost  Damaged product replacement under warranty 23

Product: Salient Features
VIDEOCON
Available sizes: 21´-29´ 21´Multi brands ± Akai, Sansui, Kenwood and Toshiba. Availability of a new model Plasma Implemented large ERP system Features like Nicam Sterio, Timer, automatic settings, organizer, Head phone and latest Internet TV available  Tie up with Telecruz Technologies INC for NET TV  Damaged product replacement under warranty 
   
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Price: Salient Features 
List Price
‡ BPL: 14´ ± Rs 7990 ± Rs 9980 20´/21´ ± Rs 13000 ± Rs 20000 ‡ ONIDA: 14´ ± Rs 7990 ± Rs 9980 20´/21´ ± Rs 13000 ± Rs 21,000 ‡ PHILIPS: 14´ ± Rs 7990 ± Rs 10980 20´/21´ ± Rs 13000 ± Rs 19,000 ‡ VIDEOCON: 14´ ± Rs 5900 ± Rs 8990 20´/21´ ± Rs 8490 ± Rs 17990

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Price: Salient Features 
Discounts available through
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ In exchange of old TVs Tournament or event based like World Cup Cricket Festive season discounts PrePre-budget discounts Lottery schemes (Seasonal) Scratch card offer (seasonal) Twin pack offer ± Buy one TV, get a washing machine etc. free µChhappad Phadke¶ offer by Videocon ± Rs 2000±3000 2000±
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Allowances available through

Price: Salient Features 
Installment facilities available
‡ Proof of salary/income statement is required, tie up with various Financial Institution like ICICI, SCB, etc. 

Discount on full payment in cash

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Price: Salient Features 
Event Sponsoring
‡ Like Philips National Football League, Videocon Screen Awards, ‡ Sponsorship of Entertainment and Television events by other brands like BPL Top 10, etc. 

Tie-ups with E-Commerce sites (B to C) like Fabmart.com, TieEeBuyGuru.com by Sony India  Money bond scheme with every purchase, as done by Akai

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Price: Salient Features 
Money back guarantee scheme  Customer enticing routes- Replacement of sets, and routesheavy discounts on new sets as done by Akai  Dealer enticing route - as done for Videocon brands  Multi brand strategy of Videocon  Onida arcade ± online selling TV  Advertisements through:
‡ Newspapers, Magazine, TV, Radio, Glow signs, Banners, Web Advertising
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Promotion: Salient Features 
Advertisements done by various eminent popular personalities:
‡ like Amitabh Bachhan in BPL, Govinda in Videocon, Sachin Tendulkar in Philips, voice of Amitabh Bachhan is used in Onida Ad. 

Quick accessibility of CTVs through wide dealer network  Increasing distribution outlets of linking them through satellite links  For rural sector, moving with painted vans  Onida approaches rural co-operative societies co30

Price: Salient Features 
Presence in both rural and urban market  Online connectivity of distributors  Distributors are present in almost all state capitals and dealers present in almost all towns and small cities
Manufacturer Customer
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Distributor

Dealer

BPLBPL- Facts
Reputation for reliability and quality Tremendous brand equity High brand preference in the replacement market Largest distribution network in the country High level of indigenization (import content as low as 13%) makes it price competitive  Technological tie up with Sanyo of Japan has given access to the latest technology     
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BPL - Strategies 
Originally targeted middle income group, changing focus and going for middle to high end (newer segments)  BPL employing a multi-brand strategy to plug the gaps in BPL's CTV portfolio and use these new brands "to get incremental volumes, while BPL remains the mother brand´.  High-end convergence products will come under the Digital-BPL branding. The company has already introduced its digital range.  At the low end of the CTV market, BPL is launching primarily to compete with Chinese and local brands. Under the 'Evelux' brand name, BPL will launch it into selective markets regionally.
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BPL - Strategies 
BPL points out that this new low-end brand ³will not just be a cheap lowproduct´, and that it will ³not just address a price-point issue´ but it pricealso has quality.  BPL is aggressive on exports.  The company¶s recent launch includes a 100% pureflat - screen TV, a new 29-inch CTV, a new 25-inch CTV called Studio 25, Plasma 2925Display, i.e. the flat TVs with no picture tubes, the PC-TV, i.e. the PCPersonal Computer-cum-TV. Computer-cum Product innovation, introduction of new features and high brand recall has helped BPL in maintaining its leadership position.
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ONIDA - Facts
One of the first players to enter into the market Major presence in the Northern and Eastern regions Enjoys substantial Brand Equity Traditionally operated in the premium segment with low volumes and high margins  Influx of MNCs right into the segment has put it in the line of fire  It is fighting back by launching wide screen models in direct competition with MNCs and also lowering price and trying to cater to lower segments  Tie up with JVC ensures access to latest technologies 
  
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ONIDA - Strategies 
Onida gives more stress to dealer network  It introduced µOnida Loyalty Programme¶, meant exclusively for Onida customers, and µOnida Display Contest¶ targeted at the dealers  The loyalty programme has been branded as µOnida²offer for life¶, µOnida² which suggests that the customer need not move out of the Onida banner for the rest of his life  Onida keeps introducing contemporary models and helps the Onida owners to upgrade

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ONIDA - Strategies 
Onida is planning to use its strength in circuit and cabinet design to target very specific premium customer segments.  Finally the company will be strengthening its after sales service as it believes that a large scope of differentiation lies here.  Aggressive brand promotion¶s aftermath has given Onida wisdom to manage volumes.
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PHILIPS -Facts 
The late entrant to the Industry  Dutch parent company Philips NV increased its stake to 51% at the onset of liberalisation  It was a leader in the B/W segment and with the backing of the parent company it launched several new CTV models with latest features  Enjoys considerable Brand Equity on account of its 30 year old market presence
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PHILIPS - Strategies
Positioned at the upper end of the middle to upper market Enforcing its brand image with a media blitzkrieg It uses umbrella brand¶s image for promotion Schemes of an additional warranty and a free gift whereby customers get a guarantee of five years are used  They emphasize also on new technology products especially digital technology. These include Integrated Wireless FM Digital Wide screen TV, High Definition Rear Projection TV and Real Flat TV DVD  Targeting rural middle class also 
  
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VIDEOCON - Facts 
Matching features of the competitors at a competitive price  Wide range of models giving choice to the customer  Not in competition with MNCs as products are of low price and mediocre quality  Recently trying to access premium market through sub brands like Sansui, etc.

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VIDEOCON - Strategies 
Positioned at the lower and middle segments  Extremely aggressive player adopting high volume ± low margin strategy  Videocon International is offering discounts along with surprise gifts to its customers on the purchase of a Videocon CTV from time to time especially on seasons  Videocon International is already offering scratch card schemes  Targeting rural market
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New Entrants¶ Strategies - Sony 
Company's leadership position is a reiteration of its ability to connect with the customer's mental space  It enjoys the image of Japanese umbrella brand having a presence of over the last 53 years  The company has evolved into a luminous brand with technology innovation, quality and premium  Sony India is trying to expand its product portfolio in the country to have convergence  Sony will increase the dealer network by 25%, from 1,488 to 1877. The number of Sony Worlds will also be increased from the current 13 to 26 during this financial year 42  Targeting rural markets also

New Entrants¶ Strategies - Akai 
Akai used its exchange offer blitzkrieg to root its presence in market. In effect, Akai created a market -- for secondsecondhand CTVs  Riding on the low margin ± high volume theory  Using electronic parts imports from Japan as its strong point  Strong after sales service networks  Targeting low and middle customer segments  Targeting rural markets heavily 43  Too small leadtime for new product launch

Comparative Positioning
Company BPL Onida Philips Videocon Sony Akai Target Middle to upper Middle to upper Middle to upper Lower to middle Upper Lower to middle Positioning Quality for price Superior product Features Affordable High image Affordable
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