A

PROJECT REPORT ON

“STUDY OF REFRIGERATOR INDUSTRY IN TERMS

OF VARIOUS MARKETING TOOLS AND SURVEY OF

DEALERS' SATISFACTION”

Submitted to

In requirement of partial fulfillment of Master of Business

Administration (MBA)

Submitted on

Submitted by
PREFACE

There are always two sides of knowledge, practical as well as theoretical. Practical is the path

through which one can reach his destination. But it is essential to have clear ideas to reach that

destination and that is what theoretical knowledge means. In short, theoretical is the instruments

which push back the practical one.

Experience makes man perfect. By facing practical situation, one can get new ideas. Theoretical

studies are something, which came by practically. Management student can make use of

whatever he or she gets from his or her Academic background. Since, the commencement of

business and services importance hiked up day by day.

Generally, life makes us to learn something new every time and by this Project study, I get a

chance to learn a lot. Basically, it makes us aware about the real life situation.

This project contains detailed study about the marketing strategy of SBI vis-à-vis ICICI Bank.

What are the strength and weakness of both of these banks.

I have tried my best to get the necessary information for project which includes secondary as
well as primary data.
ACKOWLEDGEMENT

This report has been submitting in partial fulfillment of the requirement of the award of M.B.A.

from _____________________________________

It is a universal fact that for study of a project in depth, I need the support of many people right

from the stage of conceiving the idea to completion of report. It is difficult for a single person to

do the job efficiently without interaction & involvement of others.

I take this opportunity to thank ________________________my guides,

_______________________ for giving me Valuable Guidance and providing facilities to

successfully complete my Grand Project.

I am grateful to other faculty members of ___________for their support whenever required.

Discussions with friends also have served to provide sought after information. I am thankful to

all our batch mates.

Finally I am thankful to my parents and Lord Almighty without whose blessings tasks are
incomplete.
TABLE OF CONTENT
EXECUTIVE SUMMARY

The Indian consumer durables industry has witnessed a considerable change in the past couple of

years. Changing lifestyle, higher disposable income coupled with greater affordability and a

surge in advertising has been instrumental in bringing about a sea change in the consumer

behaviour pattern. This industry consists of durable goods used for domestic purposes such as

televisions, washing machines, refrigerators, microwave ovens, mobile phones etc. The growth

in the consumer durables sector has been driven primarily by factors such as the boom in the real

estate & housing industry, higher disposable income, emergence of the retail industry in a big

way coupled with rising affluence levels of a considerable section of the population. As per a

survey conducted by FICCI on the Indian consumer durables industry, a shift in consumer

preferences towards higher-end, technologically advanced branded products has been quite

discernable. This shift can be explained by narrowing differentials between the prices of branded

and unbranded products added with the high quality of after sales service provided by the

branded players. The shift has also been triggered by the availability of foreign branded products

in India owing to lower import duties coupled with other liberal measures as introduced by the

government.
Industry Classification

The consumer durables industry can be broadly classified as consumer electronics and consumer

appliances. The consumer appliances category can be further segmented as white goods and

brown goods.
Current marketing environment of Consumer Durables.

Industry size, growth and trends

India’s consumer market is riding the crest of the country’s economic boom. Driven by a young

population with access to disposable incomes and easy finance options, the consumer market has

been throwing up staggering figures. India officially classifies its population in five groups,

based on annual household income. These groups are:

 Lower Income;

 three subgroups of Middle Income; and

 Higher Income.

However, the rupee income classifications by themselves do not present a realistic picture of

market potential for a foreign business enterprise, because of significant differences in purchase

power parities of various currencies. In fact, the Indian rupee has a very high purchase power

parity compared to its international exchange value. For instance, while the exchange rate of one

US dollar is 48.50i Rupees, the domestic purchasing power of a US dollar in the US is closer to

the purchasing power of Rs 6 in India, for equivalent needs and services. As a result, India ranks

fifth in the world, on purchase power parity terms, despite being having low per capita national

income (US$ 340 per capita).

Consumer Classes

Even discounting the purchase power parity factor, income classifications do not serve as an

effective indicator of ownership and consumption trends in the economy. Accordingly, the

National Council for Applied Economic Research (NCAER), India’s premier economic research
institution, has released an alternative classification system based on consumption indicators,

which is more relevant for ascertaining consumption patterns of various classes of goods. There

are five classes of consumer households, ranging from the destitute to the highly affluent, which

differs considerably in their consumption behaviour and ownership patterns across various

categories of goods. These classes exist in urban as well as rural households both, and

consumption trends may differ significantly between similar income households in urban and

rural areas.

Overview of India’s Consumer Durables Market

The Indian consumer durables segment can be segregated into consumer electronics (TVs, VCD

players and audio systems etc.) and consumer appliances (also known as white goods) like

refrigerators, washing machines, air conditioners (A/Cs), microwave ovens, vacuum cleaners and

dishwashers.

Most of the segments in this sector are characterized by intense competition, emergence of new

companies (especially MNCs) and introduction of state-of-the-art models, price discounts and

exchange schemes. MNCs continue to dominate the Indian consumer durable segment, which is

apparent from the fact that these companies command more than 65 per cent market share in the

colour television (CTV) segment.

In consonance with the global trend, over the years, demand for consumer durables has increased

with rising income levels, double-income families, changing lifestyles, availability of credit,

increasing consumer awareness and introduction of new models. Products like air conditioners

are no longer perceived as luxury products.

Growth of Consumer Electronics Production in India

Overall the percentage increase during the past 7 years is shown above. It can be seen that the

growth of durable industry has been on the upper side during this years.
During FY09, volume share of the single largest consumer durable was colour TVs at 30%,

followed by refrigerators and air conditioners at 18% and 13% respectively. Washing machines

and other assorted consumer durables captured a share in the total volume by 5% and 34%

respectively.
About Refrigerator

A refrigerator (often called a "fridge" for short) is a cooling appliance comprising a

thermally insulated compartment and a mechanism to transfer heat from it to the

external environment, cooling the contents to a temperature below ambient.

Refrigerators are extensively used to store foods which deteriorate at ambient

temperatures; spoilage from bacterial growth and other processes is much slower at low

temperatures. A device described as a "refrigerator" maintains a temperature a few

degrees above the freezing point of water; a similar device which maintains a

temperature below the freezing point of water is called a "freezer".

The first known artificial refrigeration was demonstrated by William Cullen at the

University of Glasgow in 1748.

Refrigerators are of two types:

1. Direct cool Refrigerator: Cooling comes from the compressor only, need to defrost

the ice when the frost created inside the freezer.

2. Frost free Refrigerator : A combined fridge/freezer which applies the frost free

system to the freezer compartment only is usually called "partial frost free", while one

which also applies it to the fridge compartment is called "total frost free". The latter

features an air connection between the two compartments, with the air passage to the

fridge compartment regulated by a dumper. In such a way, a controlled minor part of the

dry and fresh air coming from the dynamic cooling element located within the freezer

can reach the refrigerator.

Refrigerator: Demand and supply side dynamics

According to CMIE statistics, domestic consumption of refrigerators witnessed a decline

between FY06 and FY09, while exports grew. From 3% of the total consumption in FY05,

exports grew to7% of the total consumption in FY09. On the supply side, domestic production of

refrigerators in the total supply remained at the same levels in the past three years ended FY09.

At 99% each in FY06-09, the share of production reported a mere 100 basis point increase over

FY06, as imports slided. The refrigerator industry posted a sluggish performance since the

beginning of FY09 on the back of volatile steel prices. The first quarter saw a production growth

of a mere 50 basis points to 2.18 million units, as per CMIE.

Industrial Growth

The industrial sector grew in moderation during FY09 at 8.5% on the back of a comparatively

higher growth of 11.5% during the previous fiscal. The country’s real GDP grew by 9.6% during

FY09. The consumer durables segment witnessed a fall in production particularly for items

where consumer preferences have shifted towards newer products. Shifting in the consumption

pattern coupled with rising input costs of steel, iron ore etc, may further affect the production

levels of these goods. On the supply side newer variants of consumer durables on the back of

technological advancements have flooded the market, whereas on the demand side it is the

prospering middle class and consumerism which have led to changing demand patterns.
Foreign Direct Investment

The net Foreign Direct Investment (FDI) inflows to India increased from US $ 22 bn in FY07 to

US $ 32.3 bn in the following fiscal. During 2007 and 2008, the share of FDI in the electronic

goods segment remained flat at 0.2%, coming on the back of a 1.5% share in CY06.

SLEPT ANALYSIS

Foreign investment up to 100 per cent is possible in the Indian consumer electronics industry to

set up units exclusively for exports. It is now possible to import duty-free all components and

raw materials, manufacture products and export it. EHTP (Electronic Hardware Technology

Park) is an initiative to provide benefits to companies that are replacing certain imports with

local manufacturing. EHTP benefits include export credits, no duties on imported components or

capital equipment, business tax incentives, and an expedited import-export process. The

government, in an attempt to encourage manufacture of electronics in India has changed the

tariff structure significantly.

Customs duty on Information Technology Agreement (ITA-1) items (217 items) has been

abolished from March 2005. All goods required in the manufacture of ITA-1 items are exempt
from customs duty. Customs duty on specified raw materials / inputs used for manufacture of

electronic components or optical fibres / cables has been removed. Customs duty on specified

capital goods used for manufacture of electronic goods has been abolished.

Growth Scenario

Rising disposable income and declining prices of durables have resulted in increased

volumes.An increase in disposable income is aided by an increase in the number of both double-

income and nuclear families.The market for consumer durables (including entertainment

electronics, communitarian and IT products) is estimated at Rs 32 billion (US $7.1 billion). The

market is expected to grow at 10 to 12 per cent annually and is expected to reach Rs 60 billion

(US$13.3 billion) by end of 2010. The urban consumer durables market is growing at an annual

rate of seven to 10 per cent, the rural durables market is growing at 25 per cent annually. Some

high-growth categories within this segment include mobile phones, TVs and music systems.

Consumer durables are expected to grow at 10-15 per cent in 2010-11, driven by the growth

inrefrigerators and air conditioners. Value growth of durables is expected to be higher than

historical levels as price declines for most of the products are not expected to be very significant.

Though price declines will continue, it will cease to be the primary demand driver. Instead the

continuing strength of income demographics will support volume growth.

The key growth drivers for the Indian consumer durables industry:

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 underthe double

income families. The growing Indian middle class is an attraction for companies who are out

there to woo them.

Availability of newer variants of a product: Consumers are spoilt for choice when it comes

to choosing products. Newer variants of a product will help a company in getting the attention of

consumers who look for innovation in products.

Product pricing: The consumer durables industry is highly price sensitive, making price the

determining factor in increasing volumes, at least for lower range consumers. For middle and

upper range consumers, it is the brand name, technology and product features that are important.

Availability of financing schemes: Availability of credit and the structure of the loan

determine the affordability of the product. Sale of a particular product is determined by the cost

of credit as much as the flexibility of the scheme.

Rise in the share of organised retail: Rise in organised retail will set the growth pace of the

Indian consumer durables industry. According to a working paper released by the Indian Council

for Research on International Economic Relations (ICRIER), organised 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 2011-2012. The share will grow with bigger

players entering the market.

Innovative advertising and brand promotion: Sales promotion measures such as discounts,

free gifts and exchange offers help a company in distinguishing itself from others.
 Festive season sales: Demand for colour TVs usually pick up during the festive seasons. As a

result most companies come out with offers during this period to cash in on the festive mood.

This period will continue to be the growth driver for consumer durable companies.

Major hurdles and challenges plaguing the Indian consumer durables sector:

Threat from new entrants, especially global companies: The domestic consumer durables

sector faces threat from newer companies, especially from global ones who have technologically

advanced products to offer.

Rivalry and competition: Presence of a large number of players in the domestic consumer

durables industry leads to competition and rivalry among companies. Threat from rivalry and

competition poses a threat to domestic companies.

Potential markets remaining yet untapped: A large segment of the domestic market, mostly

the rural market is yet to be tapped. Tapping this yet untapped and unorganised market is a major

challenge for the Indian consumer durables sector.

Threat from substitute products/services: The domestic consumer durables industry is

plagued by threats from substitute products. Easy accessibility to theatres/multiplexes, especially

in urban areas has turned off the viewership from TV to a large extent. With the advent of a

horde of FM radio stations, radio sets have now substituted TVs.

Customer power with respect to availability of choice: The availability of a wide product

line on account of most products being homogeneous, poses a threat for companies operating in

the consumer durables sector. Customers have the choice of both domestically produced and

imported goods, with similar features.

OBJECTIVE OF THE STUDY:

The study is conducted with the following objectives :

 To understand the Refrigerator industry trends in demand, production and

sales in the past years.

 To study the structure of the market in terms of market share of different

types of Refrigerator, major players, penetration levels and share of

different regions.

 To study the major players in the industry with their product mix, financial

performance, marketing strategies and highlight their future plans.

 To examine the existing distribution channels used by the industry players.

 To understand the major trade practices of the industry regarding the

trade margins, trade discounts, credit and payment terms through a

detailed survey.

 To understand the warranty procedure and the service network of the

industry players.

 To ascertain the satisfaction level of the channel members with the current

practices and to recognize the gaps, if any.

RESEARCH METHODOLOGY:

The Study will be conducted in two phases:

 Secondary Research:

This stage involves the collection of secondary data on the refrigerator

industry, the major players and past & future market trends through

Published Reports, Magazines, and the Annual reports of the companies.

 Primary Research:

This stage involves the collection of primary data. The research will be

carried in Dharwar. The study will be conducted for the Dealers who are in

Dharwar city.

DATA COLLECTION METHOD:

This will be done in the following manner,

In depth Interviews of the Dealers of the Refrigerator regarding their stocking

patterns, sales seasonality, operating prices, trade margins, trade practices of

different companies, tastes and preferences of the customers and the other

practices adopted by them.

 Approach

The questionnaire will be used to conduct the study for the Refrigerator Dealers.

The Research will be conducted for dealers, as they are the people who are

engaged in the selling of the product. Hence, the idea about the factors, which

plays an important role during the selling process, can be known.

SAMPLE METHOD:

Sample :- Dharwar

Sample Size :- 50 Refrigerator Dealers.

Sample Method :- Random Sampling.

Sample Coverage :- Dealers.

Comparative product models mapping

From the direct cool Refrigerator capacity mapping and comparative model mapping it

can be easily understood that just because to give wider option to choose from,

companies are segregating the already segregated direct cool product category. Most of

the Refrigerators which are getting sold in India belong to direct cool refrigerator product

category. It /is compulsory for the appliances brands to make strong hold present in this

segment to create brand preference in higher product segments. That‟s why Whirlpool

is having 36 models (consisting variants also) which represents strong hold in the

segment.

Companies are lying strongly in the entry level Refrigerators that‟s why they have

flooded the segment with various liters capacity. Companies like Whirlpool having

presence in170, 175, 180 liters capacity. This strongly suggests the strategy of

Whirlpool to offer the same product for different customers for different usage pattern

and need.

Company like LG is also having presence in 4 sub segments, like 175, 180,185,190

liters capacity with different design and variants to choose from, in other way it is

focused to the customer who just want a fridge which can cool, and the customer don‟t

want to spend much over it, with this LG is also focusing on that customers which is

seeking different product attributes for the product, which he/ she want to purchase.
Direct cool segment is the segment where Haier is having presence in 190 and 210

liters, with only 11 models and specifically in entry level it has only 7 models whereas

their competitors are having 15 models. Whirlpool is having 25 models in this category

where as Godrej is having 15 models.

3 Competition

LG, is currently market leader, who leads market with 34% of market share in India, with wide

range of refrigerators & innovative designs & association of their product through taking

common models into there advertisements. A brief about LG is as follows.

LG Electronics was established on October 1, 1958 (As a private Company) and in 1959, LGE

started manufacturing radios, operating 77 subsidiaries around the world with over 72,000

employees worldwide it is one of the major giants in the consumer durable domain worldwide.

The company has as many as 27 R & D centres and 5 design centres. Its global leading products

include residential air conditioners, DVD players, CDMA handsets, home theatre systems and

optical storage systems.

Then there is Samsung who follows LG in Market share with half a share from LG, with

only18.1%. Samsung India commenced its operations in India in December 1995, today enjoys a

sales turnover of over US$ 1 billion in just a decade of operations in the country. Samsung

design centres are located in London, Los Angeles, San Francisco, Tokyo, Shanghai and Romen.

Samsung India has its headquartered in New Delhi and has a network of 19 Branch Offices

located all over the country. The Samsung manufacturing complex housing manufacturing
facilities for Colour Televisions, Colour Monitors, Refrigerators and Washing Machines is

located at Noida, near Delhi. Samsung ‘Made in India’ products like Colour Televisions, Colour

Monitors and Refrigerators are being exported to Middle East, CIS and SAARC countries from

its Noida manufacturing complex. Samsung India currently employs over 1600 employees, with

around 18% of its employees working in Research & Development.

Whirlpool of India

Whirlpool was established in 1911 as first commercial manufacturer of motorized washers to the

current market position of being world's number one manufacturer and marketer of major home

appliances. The parent company is headquartered at Benton Harbor, Michigan, USA with a

global presence in over 170 countries and manufacturing operation in 13 countries with 11 major

brand names such as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Laden and Ignis. Today,

Whirlpool is the most recognized brand in home appliances in India and holds a market share of

over 25%. The company owns three state-of-the-art manufacturing facilities at Faridabad,

Pondicherry and Pune. In the year ending in March '06, the annual turnover of the company for

its Indian enterprise was Rs.1,375 crores. According to IMRB surveys Whirlpool enjoys the

status of the single largest refrigerator and second largest washing machine brand in India.

Godrej India

Godrej India was established in 1897, the Company was incorporated with limited liability on

March 3, 1932, under the Indian Companies Act, 1913. The Company is one of the largest

privately-held diversified industrial corporations in India. The combined Sales during the Fiscal

Year ended March 31, 2006, amounted to about Rs. 58,000 million (US$ 1,270 million). The
Company has a network of 38 Company-owned Retail Stores, more than 2,200 Wholesale

Dealers, and more than 18,000 Retail Outlets. Company has Representative Offices in Sharjah

(UAE), Nairobi (Kenya), Colombo (Sri Lanka), Riyadh (Saudi Arabia) and Guangzhou (China-

PRC).
The Marketing Mix: Ingredients for Success

The marketing mix, earlier known as the 4 P‟s, (but now has a few more), is a vital part

of any marketing strategy. This is a tool whereby the marketer takes decisions on what

and how a product should be, where it can be sold, how it should be priced, how it will

be promoted, how to equip the people who are responsible for selling the product… and

so on. Getting the marketing mix right is equally important for the large corporation and

the small business owner.

One of the most critical marketing management decisions is that decision of setting the

marketing mix values, and selecting and employing strategy that periodically changes

that marketing mixes in response to changing business environment. The marketing mix

problem involves setting the values of the marketing decision variables; the four P‟s;

namely, Product (its quality), Price, Place (distribution and sales-force expenditures)

and Promotion (advertising, selling). Developing an effective marketing mix is important

for product planners seeking to gain competitive advantage in industrial markets. The

decision regarding specifying the marketing mix depends on a set of variables, such as

competitor's price, competitor's product quality, competition level, forecasted sales and

others. These types of variables necessitate adoption of appropriate approaches that

can deal with such variables' nature marketing mix mapping is a step done to achieve

this.
Product:A lot of thought and effort goes into designing a product offering. The most

important question, as a marketer, a person need to ask is whether there is a need for

that type of product and how this product satisfies that need better than those of their

competitors. This will force to think of why that product is unique, and thereby help to

evolve that product‟s Unique Selling Proposition.

Price: This element of the marketing mix can be many a strategy‟s undoing. A complete

understanding of the financials that drive a business is essential before deciding a

pricing strategy. Base your decision after considering the following – what is the

perceived value of your product in the eyes of the customer? How price elastic is the

market? Do you wish to load overheads on to the new product, if an existing product

line is capable of absorbing them? What is your objective – do you plan to gain market

share on the strength of a rock bottom price or do you wish to create a premium image

targeted at niche customers and price your product accordingly?

Place: This is probably that element of the marketing mix that has undergone a

complete change in definition. Traditional trading and distribution models have given

way to remote or virtual channels. While reaching the customer may have become

simpler, your job as a decision maker has become that much more complex. You now

have a plethora of options to choose from – do you go for brick and mortar or direct

mailing, use the phone or sell door to door? This decision should, first and foremost, be

driven by customer preference and then by other considerations like logistics and

economics. Indeed most businesses rely on a multi distribution channel strategy.

Promotion: In a commoditized industry, this is what makes the essential difference.

Possibly no other marketing mix element draws as much attention from strategy

makers. Again, let consumer needs drive your efforts. Does your marketing

communication address a specific need of the target audience? Is the message

memorable? Does it spur action? Here again, the entire landscape has changed from

what it was a few years ago. Promotion has gone way beyond mere advertising and

public relations – it is now a highly evolved process, ranging from live events to internet

marketing. In these times of information overload, promotion strategies must pack

sufficient punch to cut through the clutter.

The marketing mix is a dynamic entity and needs to be reviewed and refined

periodically. It always helps to stay in touch with the latest developments. Marketing mix

mapping for the brand is done to know the standing of the brand mapped with their

competitors with respect to essential element of marketing mix i.e., product, price,

place, and promotion. It ensures Studying marketing mix strategies of the brand

mapped and reviewed and refined periodically according to market condition and

competition comparative mapping with other major players in the market, finding

loopholes and building effective marketing mix strategy for Haier in Refrigerator and

Washing machine segment

Appliances market opportunities:

The top 67 cities in India are also the key potential market for appliances companies‟

.According to NCAER, usage pattern of consumer durable in these cities reflect a

growing trend for appliances such as refrigerator and washing machines. Ownership of

refrigerators, for instance, in these 67 cities is much higher than the national average

492 out of 1000 household in these cities own refrigerators compared to the national

average of 134 to 1000 households. Similarly, 316 households per 1000 households in

the top 67 cities owned washing machine compared to the national average of just 72

household‟s among every 1000 households.

The housing boom in these cities is increasing the demand for appliances. The

increasing number of double - income families also bodes well for the sector.

The frost free segment of the refrigerator market is seeing spectacular growth as more

urban families are replacing their old refrigerators. Consumers in the south and western

regions of India go for high- end models of appliances while the north and east continue

to prefer lower-end models and direct cool refrigerators Optimistically we can say that

robust appliances sales will continue in 2010, particularly since changes in the electricity

scenario is making it power accessible to more Indians in the urban as well as rural

areas.
Industry structure and development

The growth in the refrigerator category has been marginal in the year under review

compared to the segments which have however grown faster than others. For instance

in the refrigerator category, the frost free category (27% contribution) has had a double

digit growth, while the large DC segment actually decline, leading to an overall growth in

the refrigerator of 8%. Given the fact that refrigerator category has shown a reversal of

trends, and with washer growth expected to continue, the overall growth is likely to be

better in the ensuring financial year.

The Indian market size for refrigerators was estimated at 4.1 million units and the

installed manufacturing capacity of these players is above 6.5 million units per annum.

Also the washing machines market in India was estimated at 1.45 million units while the

installed manufacturing capacity is near 3.75 million units. This clearly indicates much

lower capacity utilization for most of the players. The quality of these products

manufactured still needs to be enhanced if they are to catch up with the global

standards. This could partly be due to highly labor intensive operations with low

automation and also because of the prevailing technology gap.

The concept-to-market time for most of the plants in India is still higher than the global

norm and except for LG, exports from India haven‟t really picked up as projected. There

still seems to be quite a way to go before India becomes one of the global appliance

production and export hubs like China.

LG is one of the leading players that offer a full range of appliances to Indian consumers

– right from refrigerators to CTV to mobile phones, etc. Other players can also adopt a

similar strategy as this will help these companies to increase their influence on the

supply chain as more dealers / distributors will be willing to display a full range of

products rather than a couple of appliances. This can also help absorb costs for the

loss-making products at the expense of profitable ones. Whirlpool is working on

improving cost efficiency and is operating a 5 day extended shift in its plants. The

company is determined to invest further in India to regain its market leadership.

Promotion

Samsung Innovative promotion and advertising initiatives

To establish trust and confidence among Indian consumers, Samsung did active

promotion and advertising by taking the following initiatives.

Samsung India associated itself with the ruling passion of the Indian mass

consciousness: Cricket. Samsung launched the Team Samsung campaign with the

stars of the Indian cricket team, which caught the imagination of an entire nation.

Samsung also brought to India what was possibly the biggest cricketing spectacle of

this decade, the historic India vs. Pakistan cricket series - „The Samsung Cup‟.

Not confining itself to cricket, Samsung sponsors the Indian contingent to the

Olympics and the Asian Games. It also ran training programmes for deserving Indian

athletes under the Olympic Ratna banner. Samsung has also helped bring to India, for

the first time, the Olympic torch relay. Samsung also brings every year to India - the

World Cyber Games, which is regarded as the Olympics of the Cyber world.

Samsung also launched a series of innovative below-the-line activities. In mobile

phones, Samsung tied up with noted painter Satish Gujral for his paintings to be

available as downloads on Samsung mobile phones.

Product placement was done in movies and popular television serials like „Jassi‟

where Samsung products were set in lifestyle environments.

Samsung branded its products as superior technology and environment friendly ones.

The Samsung refrigerators and ACs incorporate a revolutionary new technology called

Silver Nano Health System that ensures freshness and bacteria free environment. It
launched the “Bio” range of products. In microwave ovens, features like the bio-ceramic

coating and 3D shower waves keep in mind the health conscious public of today.

Launched a special marketing campaign for Flat TVs including a focused advertising

campaign „Duniya Hai Gol, TV Flat‟ and attractive exchange offers. As a result,

flatscreen TVs make up over 50 per cent of Samsung‟s TV sales compared an industry

average of 17 per cent.

Customized products for Indian Consumers

Samsung understands the local cultural sensibilities to customize its products

according to the Indian market. It has set up a “usability lab” at the Indian Institute of

Technology in New Delhi to customize Samsung products to meet the specific needs of

Indian consumers. This industry-institute partnership is helping Samsung to study and

analyze consumer response in aspects of product design, including aesthetics,

ergonomics and interface.

Through its research done on consumer preferences in India, Samsung has

concluded that Indian consumers want more sound oriented products. Thus, the

Samsung televisions for India have a higher sound capacity than their foreign

counterparts.
Innovative marketing strategies of LG

To make itself a known brand in the consumer electronics sector, LG has taken

innovative marketing and promotional initiatives:

Launch of new technologies in consumer electronics and home appliances.

LG was the first brand to enter cricket in a big way, by sponsoring the 1999 World

Cup, and followed it up in 2003 as well. LG brought in four captains of the Indian cricket

team to endorse its products. LG invested more than USS 8 million on advertising and

marketing in this sport.

LG has differentiated its products using technology and health benefits. The CTV

range has „Golden Eye‟ technology, air-conditioners have the „Health Air System‟ and

microwave ovens have the „Health Wave System‟.

Local and efficient manufacturing

Reduce cost and to overcome high import duties, LG manufactures monitors and

refrigerators in India at its manufacturing facility at Noida, Delhi. LGEIL had already

commissioned contract manufacturing at Mohali, Kolkata and Bhopal for CTVs. This has

helped LGEI to reduce costs.

LGEIL is implementing a “digital manufacturing system”DMS) as a cost-cutting

innovation.

This system is a follow-up to the Six Sigma exercise LGEIL had initiated earlier.
Product localization

Product localisation is a key strategy used by LG. LG came out with Hindi and regional

language menus on its TV.

Introduced the low-priced “Cineplus” and “Sampoorna” range for the rural markets.

LG was the first brand to introduce gaming in CTVs. In continuation of its association

with cricket,LG introduced the cricket game in CTVs.

Pricing strategies:

If we look upon the pricing strategies adopted by the consumer durable brands we can

see that there is not much difference. Every company is trying to give variable product

option in variable prices to focus on different pool of customer incomes, and

requirements with the same brand.

The refrigerator of a company like LG which is a market leader is starting from 7500 in

175 liter capacity in direct cool refrigerator category. They are so much of variable

option in same segment to attract different type of customers one of the reasons is that

LG business is now is on such heights now due to mass production there landing

manufacturing cost is coming comparatively much lesser than their competitors.

LG pricing strategy is totally matches with its corporate strategy. First they have created

a kind of brand image where they don‟t have to depend upon their dealer and

distributors, their products are getting sold itself in the market. They keep on capitalizing

in their strategy to push the product before a customer gets enters in the store in order

to pull demand from the market.

Samsung is also adopting same kind of pricing strategy but they are different from LG in

respect to their price positioning they have got the clue that modern day demand is

pulled by the young aspiring middle class, they want lifestyle in their life and prefer life

style product and services, Samsung understood that fact and started to position as a

lifestyle product brand and their price positioning is accurately based upon it. With this

they are so much of variable option in same segment to attract different type of

customers.
Samsung starting entry level refrigerator starts from 8200 with a clear differentiation with

their competitors in this segment.

Godrej with a launch of new product line also want to create and to give a fresh look in

to their brand with vibrant colors and design and in order to come up from old Indian

brand image.

Godrej pricing is very much competitive in one way they are giving economical models

and they are also focusing on high end models with their new launch. Godrej is giving

extra profit margin of 1.3% other then what they are giving currently, with a wider focus

on brand visibility and promotion.

Whirlpool is having wider option both in refrigerator and washing machine they are also

having highest no of refrigerators models. They are also focusing majorly on to give

lifestyle feeling and their pricing is based upon it.

Haier entered the Indian market with a premium line of products, which prohibited the

brand from building a mass appeal. Although, there are so many players in the market

and there is enough space for players like Haier seeing the economy grow at around 8-

10%. In the beginning Haier was clear that it will target niche segments. For instance, it

had 2.3 kg washing machine, targeted at small washing jobs, priced at Rs 6,990, and a

bottom mounted refrigerator priced Rs 42,900, which are not offered by any other

brand. Although globally, Haier is a big name in appliances, with this segment

contributing 70% to overall turnover, in India it wants a strong showing in CTV‟s also
that‟s why they focused more in electronic segment first because of that they lacked

focus in appliances in India.

 FINDINGS OF RESEARCH

1. How many brands of Refrigerator do you keep in your shop ?

( ) Godrej ( ) Haier ( ) Videocon ( ) LG ( ) Voltas () Samsung

60

50 48

40 38

30

20

10 5
4 4
1
0
godrej haier videocon LG voltas Samsung

FINDINGS

During the survey it was observed that majority of the distributors are selling major 02

brands that is LG and Samsung. Other brands are not having that much of presence in

the market though there were some distributors who were selling brands like Haier,

Godrej and voltas.

2. Rank the below brands in terms of sales turnover and in % ?

Turnover (Rank) %

Godrej ----------------------- -----------------------

Haier ----------------------- -----------------------

Videocon ----------------------- -----------------------

LG ----------------------- -----------------------

Voltas ----------------------- -----------------------

Samsung ----------------------- -----------------------

On the basis of turnover (% sales of Refrigerator)

60

50 48

40 38

30

20

10 5
4 4
1
0
godrej haier videocon LG voltas Samsung

FINDINGS

Majority of the sales turnover is accounted for LG and Samsung. Both the brands are

equally doing well in the market. For their it was observed during the survey that

companies like LG and Samsung are having various schemes for customers as well as

for the distributors which boosts the sales of their companies compared to other

companies.
3. Is there any seasonality in the Demand of Refrigerator ?

( ) yes ( ) No

If, Yes than what is the general peak season, --------------------------------------

60

50
50

40

30

20

10

0
0
yes no

FINDINGS

Sales of refrigerator is directly related to the season. During summers, sales of

refrigerator is noted at the highest level during the year. Also during this time period

there are lot of incentive schemes offered to customers as well as the distributors to

boost the sales.

4. What are the attributes Consumer prefer while buying any Refrigerator ?

(Rank them, 1 = Highest)

( ) Price ( ) Brand name ( ) Technology ( ) After sales service

( ) Durability ( ) Consumer finance ( ) Others ----------------

7
6
6
5
5
4
4
3
3
2
2
1
1

0
brand name technology consumer after sales price durability
finance service

FINDINGS

During the survey, it is observed that the first thing that the customer look is for the

brand name followed by the type of technology and finance options. It is clear that, to

improve the sales, companies should try to Improve the brand image and should invest

in the R&D to launch the latest features. However it takes a lot to improve the brand

image, but the companies should try in that segment since the purchase of refrigerator

is more centric towards the brand name followed by the technology.

5. What are the Sales Promotional Tools offered to you ?

Company

(a) Cash Discount ----------------------

(b) Free Offers ----------------------

(c) Long Term Credit ----------------------

(d) Sales Contests ----------------------

(e) Others ----------------------

FINDINGS

Almost all the above Promotional tools are offered by Samsung and LG. However

companies like haier and Voltas don‟t give Long term credits to the distributors.
6. Of the above Tools Rank them as below,

(Rank them, 1 = Highest)

(a) Cash Discount ----------------------

(b) Free Offers ----------------------

(c) Long Term Credit ----------------------

(d) Sales Contests ----------------------

(e) Others ----------------------

4.5
4
4

3.5
3
3

2.5
2
2

1.5
1
1

0.5

0
sales contest cash discount free offers long term credit

FINDINGS

Distributors prefer more of sales contest, where in they have some incentives clubbed

with the volume of sales that they do, followed by the cash discounts and free offers.

However Long term credits are preferred the last one, since they have no incentives.

But if short time credits are offered, than companies can improve the sales, but the

industry is such that short term credits are not offered because of the huge investments

made by companies.
7. What are the Trade Practices offered by the various companies,

(a) Margin (approx) ------------%

(b) Replacement ( ) Yes ( ) No

(c) P.O.P. Material ( ) Yes ( ) No

(d) Training ( ) Yes ( ) No

(e) Shop infrastructure ( ) Yes ( ) No

 CONCLUSIONS AND SUGGESTIONS

CONCLUSIONS

1 During the survey it was observed that majority of the distributors are selling major 02

brands that is LG and Samsung. Other brands are not having that much of presence in

the market though there were some distributors who were selling brands like Haier,

Godrej and voltas.

2 Majority of the sales turnover is accounted for LG and Samsung. Both the brands are

equally doing well in the market. For their it was observed during the survey that

companies like LG and Samsung are having various schemes for customers as well as

for the distributors which boosts the sales of their companies compared to other

companies.

3 Sales of refrigerator is directly related to the season. During summers, sales of

refrigerator is noted at the highest level during the year. Also during this time period

there are lot of incentive schemes offered to customers as well as the distributors to

boost the sales.

4 During the survey, it is observed that the first thing that the customer look is for the

brand name followed by the type of technology and finance options. It is clear that, to

improve the sales, companies should try to Improve the brand image and should invest

in the R&D to launch the latest features. However it takes a lot to improve the brand
image, but the companies should try in that segment since the purchase of refrigerator

is more centric towards the brand name followed by the technology.

5 Almost all the above Promotional tools are offered by Samsung and LG. However

companies like haier and Voltas don‟t give Long term credits to the distributors.

6 Distributors prefer more of sales contest, where in they have some incentives clubbed

with the volume of sales that they do, followed by the cash discounts and free offers.

However Long term credits are preferred the last one, since they have no incentives.

But if short time credits are offered, than companies can improve the sales, but the

industry is such that short term credits are not offered because of the huge investments

made by companies.
SUGGESTIONS

1 Consumer durable goods industry involves huge investment in the productions of goods as well

as the R&D dept. Companies which can make this investments are in a position to maintain their

position in the market.

2 companies should try to create their brand image in the mind of customers. However this also

involves time and money both, but it will have a long term effect in the sales figure. Companies

like LG and Samsung have invested lot of money in various events to reach the mind of common

people. Brand awareness is the major factor to increase the sales.

3 Distributors are at time overlooked and their needs are not taken care off. Distributors demand

short term credit which if provided, companies can really increase the sales. This industry

involves lot of investment and if short term credits are made available to the distributors, than

their working capital needs can be taken care off and sales can be incresased
 CHALLENGES AND OPPORTUNITIES

The Challenges

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.

opulation that lives in its villages still remains relevant for some

consumer durables companies. This India, at least a large proportion of its constituents, still buys

traditional refrigerators being unaware of frost free refrigerators

into these rural markets has a considerable cost component attached to it.

Companies not only have to set up the basic infrastructure in terms of office space, manpower,

but also spend on transportation for moving inventory. Even LG and Samsung, which are touted

as having the largest distribution network in the country, have a direct presence only in 15,000 to

18,000 of the around 40,000 retail outlets (for consumer durables) in the country.

back the industry. Regular power

supply is imperative for any consumer electronics product. But that remains a major hiccup in

India.
Opportunities

propensity to

consume with preference for sophisticated brands would provide constant impetus to growth of

white goods industry segment.

institutions come out with liberal incentive schemes for the white goods industry segment,

growth in disposable income, improving lifestyles, power availability, low running cost, and rise

in temperatures.

market, rural consumers should be provided with easily payable consumer finance schemes and

basic services, after sales services to suit the infrastructure and the existing amenities like

electricity, voltage etc.

ables from the nearest towns, leading to

increased expenses due to transportation. Purchase necessarily done only during the harvest,

festive and wedding seasons — April to June and October to November in North India and

October to February in the South, believed to be months `good for buying’, should be converted

to routine regular feature from the seasonal character.

LIMITATIONS:

 The sample size is restricted to Fifty for Refrigerator Dealers. By restricting

the sample, the findings get diverted a little bit from the facts.

 It is difficult to get a complete idea about the population, especially when the

product is a Consumer Durables.

 The Study will be conducted in Dharwar city. Hence, limiting the region, to

know the overall performance in different region is difficult.

 The response from the Dealers are often biased as they perceive the project

trainee as an employee of the company.

 The questionnaire is too large and this might test the patience of the

respondent.
 REFRIGERATOR QUESTIONNAIRE FOR DEALERS

1. How many brands of Refrigerator do you keep in your shop ?

( ) Godrej ( ) Haier ( ) Videocon ( ) LG ( ) Voltas () Samsung

2. Rank the below brands in terms of sales turnover and in % ?

Turnover (Rank) %

Godrej ----------------------- -----------------------

Haier ----------------------- -----------------------

Videocon ----------------------- -----------------------

LG ----------------------- -----------------------

Voltas ----------------------- -----------------------

Samsung ----------------------- -----------------------

On the basis of turnover (% sales of Refrigerator)

3. Is there any seasonality in the Demand of Refrigerator ?

( ) yes ( ) No

If, Yes than what is the general peak season, --------------------------------------

4. What are the attributes Consumer prefer while buying any Refrigerator ?

(Rank them, 1 = Highest)

( ) Price ( ) Brand name ( ) Technology ( ) After sales service

( ) Durability ( ) Consumer finance ( ) Others ----------------

5. What are the Sales Promotional Tools offered to you ?

Company

(a) Cash Discount ----------------------

(b) Free Offers ----------------------

(c) Long Term Credit ----------------------

(d) Sales Contests ----------------------

(e) Others ----------------------

6. Of the above Tools Rank them as below,

(Rank them, 1 = Highest)

(a) Cash Discount ----------------------

(b) Free Offers ----------------------

(c) Long Term Credit ----------------------

(d) Sales Contests ----------------------

(e) Others ----------------------

7. What are the Trade Practices offered by the various companies,

(a) Margin (approx) ------------%

(b) Replacement ( ) Yes ( ) No

(c) P.O.P. Material ( ) Yes ( ) No

(d) Training ( ) Yes ( ) No

(e) Shop infrastructure ( ) Yes ( ) No

8. Suggestions,

9. Name

10. Shop Name

11. Area

THANK YOU VERY MUCH FOR YOUR CO-OPERATION