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7/28/2019 Refrigerator Sectoral Analysis
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SECTORAL ANALYSIS
OF
REFRIGERATORS
Presented by:
Sheetal Kumbhare
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A chilled glass of water, a large mug of beer, a tall glass ofrefreshing laaemonade, a nice bowl of cold salad and abig helping of a frozen dessert.
Summer dreams are made of these.
But ever imagined what would happen to those dreams if
not for a big, vertical, rectangular box called therefrigerator?
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SECTORAL ANALYSIS OF
REFRIGERATORS
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History
Before the invention of the refrigerator,
ice houses were used to provide coolstorage for most of the year.At the start of the 20th Century iceboxes were used to store the food
products.The first refrigerator to see widespreaduse was the General Electric "Monitor-
Top" refrigerator introduced in 1927 .Gradually with the development oftechnology different types of refrigeratorsare manufactured and today it is one of
the most common household .
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Ice boxes
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Monitor-toprefrigerator of GE
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Refrigerators have been manufactured in India since1950s. Till
the 1980s, players like Godrej, Kelvinator, Allwynand Voltas
controlled almost 90% of the market.
Earlier, the white goods sector was categorized as a
luxury goods industry and was subject to oppressivetaxation and licensing.The situation changed after theliberalization of the Indian economy in the early 1990s.Post-liberalization, a number of foreign companies
entered the market and many domestic players alsodiversified into refrigerators. BPL and Videocon whoalready had a presence in the consumer electronicsmarket, leveraged their strengths to enter the durablessector.
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Present ScenarioIn India, refrigerators have the 2nd highest
aspirational value of all consumer durables, withthe exception of televisions. This accounts forthe high growth rate of the refrigeratormarket.
Refrigerators are presently being manufacturedin two basic designs which are referred to asDirect Cool (DC) and Frost Free (FF) refrigerator.
The direct cool segment continues to dominateIndian refrigerator market compared to more
expensive frost-free models. The growth in thissegment though marginal, has been driven byfactors like availability oflow priced models asdue to competitive pricing and agrowing middleclass.
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OVERVIEW
Indian refrigerator market is valued at Rs4000 crore Refrigerators hold only 16% of consumer durable market
that is valued at around Rs. 20,000-25,000 crore inIndia. Its market is growing at the rate of 7-8% annually. Refrigerators constitute the second largest product
segment within the Indian consumer durables sector in
India, with an estimated annual turnover of Rs 39 bnduring FY2005 with an estimated sale of 4.1m units.Projected sales for the year 2007-2008
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INDIA V/S GLOBALThe penetration of household refrigerators inIndia, the fifth largest consumer durable in termsof penetration, is 13% compared to well over :
90% in Malaysia, Australia, Singapore, HongKong and Korea;
around 80% in Thailand;close to 40% in Philippines and Chinaand 20% in Vietnam and Indonesia.
When you compare the annual commercial salesof AC and refrigeration equipment in the US atUS $ 200 per capita and in China at US $ 3per capita with a dismal US $ 0.25 per capitain India.
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SWOTStrengths1. Presence of established
distribution networks in bothurban and rural areas2. Presence of well-known brands3. In recent years, organized sectorhas increased its share in themarket vis a vis the unorganized
sector.
Weaknesses
1. Demand is seasonal and is highduring festive seasonal2. Demand is dependent on goodmonsoons3. Poor government spending oninfrastructure4. Low purchasing power ofconsumersOpportunities
1. In India, the penetrationlevel of white goods is lower ascompared to other developingcountries.2. Unexploited rural market3. Rapid urbanization4. Increase in income levels, i.e.increase in purchasing power of
consumers5. Eas availabilit of finance
Threats
1. Higher import duties on rawmaterials imposed in the Budget2007-082. Cheap imports fromSingapore, China and otherAsian countries
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Types of refrigerators :On the basis of technology the refrigerators areof two types :
(a) Direct cool(b) Frost free
Direct cool refrigerators are the low
range/price products and frost freerefrigerators are the premium products withadvanced features.
Direct cooling ones are mostly single door
refrigerators and frost-free refrigerators aremostly double and multiple doors.
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Also on the basis of capacity the refrigerators
are of different types:Mini (50 to 100 ltrs)- Right for a bachelorSmall (170 to 200 ltrs)- Right for a couple
and a small kitchenMedium(200 to 450 ltrs)- This is for nuclear
household, not too small nor too big.Large (450 to 800 ltrs)- This is for big home
and big budget
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Direct Cool71%
Frost Free
29%
Category Wise Market Share(Units)
Categoy Wise Market Share
(Revenue)
,Direct Cool
57% ,327.37
,Frost Free
43% ,246.74
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Product HierarchyNeed FamilyConvenience
Product FamilyConsumer Durables
Product LineRefrigerators
SKUs165ltrs, 180 ltrs, 200 ltrs, 350 ltrs
BrandsLG, Whirlpool, Samsung, Godrej, Kelvinator
Product TypeDirect Cool, Frost Free
Product ClassHome Appliances
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MARKET SHARE ANALYSIS
2001-06
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Performance MeasuresParameters Rerigerator Industry LG Samsung Whirlpool BPL
God
rej
Purchase exp. At the
store 61 60 54 65 66 58
Billing process 55 58 49 58 52 60
Delivery process 57 53 56 57 59 58
Product usage &
performance 65 64 66 73 63 62
After sales service 68 76 64 64 67 63
Customer schemes
and promotion 47 44 47 44 49 49
Advertising & comm. 53 59 53 53 49 52
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Customer Satisfaction IndexCustomer Satisfaction Index
46 47 48 49 50 51 52 53
LG
Samsung
BPL
GodrejWhirlpool
Videocon
Electrolux
CSI Score
CSI Score
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MARKET SHARE OF VARIOUS BRANDS IN 2006-07
30%
16%25%
29%
LGSAMSUNG
WHIRLPOOL
OTHERS
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Loyalty Segment
0% 20% 40% 60% 80% 100%
Samsung
LG
Videcon
BPL
Godrej
Whirlpool
Electrolux
Industry Average
High risk
Trapped
Accesible
True loyals
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MAJOR PLAYERSrefrigerator industry has become highly competitive as a number of brands have entered
the market and the consumer has a wide choice.
Company BrandsBPL Limited BPL
Videocon International Limited Videocon, Electrolux , Kelvinator and Allwyn
LG Electronics India Limited LG
Samsung India Electronics Limited Samsung
Whirlpool of India Ltd WhirlpoolGodrej & Boyce Mfg. Co. Ltd. Godrej
Voltas Limited Voltas
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Market players taken for analysis
LG Electronics Whirlpool India Samsung
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REFRIGERATORS
-Your key to healthier lifestyle
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COMPANY HISTORY Established in 1997, LG electronics India Pvt. Ltd
operates in India through a wholly ownedsubsidiary LG electronics, South Korea.
LG set up a state-of-the art manufacturingfacility at Greater Noida. This facilitymanufactured Color Televisions, Washing Machines,
Air-Conditioners and Microwave Ovens. During theyear 2001, LG also commenced the homeproduction for its eco-friendly Refrigerators andestablished its assembly line for its PC Monitors atits Greater Noida manufacturing unit.
Besides all this, LG India is one of the very fewcompanies in the country that has an internalEnergy, Environment, Safety and HealthDepartment. This function caters to activities likeEnergy Conservation, Environmental Issues, WorkPlace Fire and Safety as well as OccupationalHealth for the benefit of the employees.
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LG India has also been taking on a slew ofinitiatives as a part of Corporate Social
Responsibility. LGEIL is proud to haveadopted about 24 villages around ourGreater Noida facility. LG extends FreeMedical Care, which comprises of free
check ups and a free distribution ofmedicines on a daily basis. Its positioning statement is high volume
and lower margin.
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Its vision was to become a 'Health Partner'for its consumers worldwide and thereforeformulated its corporate philosophy to
make peoples' lives better, convenient andhealthier like refrigerators have the 'PNSystem', which preserve the nutrition infood.
The company has achieved a turnover of
Rs 7500 crore in 2005. LG India has also been taking on a slew ofinitiatives as a part of Corporate SocialResponsibility. LGEIL is proud to haveadopted about 24 villages around our
Greater Noida facility. LG extends FreeMedical Care, which comprises of freecheck ups and a free distribution ofmedicines on a daily basis.
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LG REFRIGERATORS Special feature to preserve nutrition withgreen ion door cooling refrigerators. LG refrigerators has been rated 5 star by
Bureau of Energy Efficiency (BEE). Recently they have launched the first TV-
Refrigerator in India
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TYPES OF PRODUCTS SEGMENTS IN
REFRIGERATOR
1. FROST FREE REFRIGERATORS
2. DIRECT COOL REFRIGERATORS3. SIDE BY SIDE DOOR REFRIGERATORS
TV-DIOS REFRIGERATORS
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FROST FREE REFRIGERATORS
Frost forms when water vapor hits the cold
coils. The water vapor condenses - turns toliquid water. When the water condenses ontothe coils, it immediately freezes and formsfrost.
After certain intervals, the timer turns on
the heating coil which is wrapped among thefreezer coils. The heater melts the ice off thefreezer coils. When all of the ice is gone, thetemperature sensor senses the temperaturerising above 32 degrees Fahrenheit and turns
off the heater. 280 471 litres are available. There are 9 models available in this segment.
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Called as Intellocoolrefrigerators
TARGET:
Middle and middle upperclass people.
PRICE:The price range varies
between Rs.14450 toRs.39880
CDV: 4 /5 STAR Rating (BEE) Works without Stablizer Intello Compressor
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DIRECT COOL REFRIGERATORS
Called as INTELLO COOL Available in the range of 175litresTo 270litres.
There are 14 models in thissegment.
TARGET:
Middle and middle upper classpeople.
PRICE: The price range varies between
Rs.6500 to Rs.11800
CDV: 4 /5 STAR Rating (BEE) Works without Stablizer Intello Compressor
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SIDE BY SIDE REFRIGERATORS
Two doors side by side. One side refrigerator andother side freezer with through the door ice /water dispensers.
580 750 litres are available. There are 5 models available in this segment. Refrigerator with TV & Radio is also available.
TV-DIOSLG India launched the Worlds First TVRefrigerator TV DIOS with a 13-inch hi-definition TFT LCD TV installed at the center of itsdoor. The 600 litres TV DIOS also has a built-in
radio tuner providing access to FM stations and issupported by built-in speakers. It has anastounding silver nano-antibacterial and nano-carbon deodorizing technology.
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Called as Intellocoolrefrigerators
TARGET:Middle Upper and Upper /premium class people.
PRICE: The price range varies
between Rs.59900 toRs.130000
CDV: 4 /5 STAR Rating (BEE) Works without Stablizer Intello Compressor Dispenser
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PROMOTION / MARKETING STRATEGY
Like the marketing of FMCG products, LG's marketingwas heavily dependent on advertising.
Its ad spend to sales ratio at 5-6% of sales was veryclose to that of FMCG giant HLL.
PROMOTION: The campaign, 'Cricket First,' which featured captains of
the 14 teams participating in World Cup 2003,
highlighted the spirit of cricket with a tagline, 'Captainsof Cricket World, for the Captain of ConsumerElectronics and Home Appliances.'The companyannounced that it would spend around Rs 400-500million on advertising during the World Cup.
ADVERTISING: Abhishek Bachchan, the brand ambassador for LG
promotes the LG INTELLO COOL range ofrefrigerators.
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Threats to the companyDespite the fact that refrigerators haveimmense utility to housewives and providea solution to avoid food wastage, the
penetration level is still below 20% and itsmarket is growing at a very small pace.This may be because:
People in small towns and rural areas do
not consider it as a necessary product andare unaware of its utility value.
Non-availability of power.
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OPPORTUNITIES Untapped market of rural India can be explored.RURAL & URBAN PENETRATION IN INDIA 2005
CRITERI
A
RURAL
HOUSE
HOLD
000
PENETR
ATION
%
URBAN
HOUSE
HOLD
000
PENETR
ATION
%
TOTAL
HOUSE
HOLD
000
PENETR
ATION
%
REFRIGE
RATORS
11014 8% 29515 48% 40529 20%
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RURAL MARKETING LG India- tripled the number of its retail &
distributor outlets in rural areas from 2004to 2006
It also tapped local forms of entertainmentlike annual haatsand fairs and made hugeinvestments in infrastructure for distributionand marketing.
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Rural Marketing - Promotion Support initiatives of LG
Mobile Van at Kasargod
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Exhibition at
RajamundryCookery Classes at different
locations for Rural
Housewives
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1000 In Store
Demonstrators at Dealer
counters in Rural Cities
Road Show at Satna
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History
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History 1911: founded by Louis Upton
1987: Whirlpool tied-up with SundaramClayton Ltd. of India to form TVSWhirlpool Ltd.
1995: Whirlpool Corp. acquired majorityof stake in the TVS Whirlpool Ltd.
1996: Whirlpool Washing Machines Ltd.and Kelvinator India Ltd. mergedtogether to form Whirlpool of India Ltd .
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2003: A new mission statement of
"Everybody creating loyal customersfor life" was adopted.
2006: Whirlpool Corporationacquires Maytag and become theWorlds largest white goods company.
S t f Whi l l
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Success mantra of Whirlpool :
Know a customer
a Be a customerServe a customer
Who are the customers
How to treat them
How to add value
How to create brand loyalty
To share cust.
Knowledge &
insight
Creating customer
touch-point value
Sharing empathy
l l f l l
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Whirlpool is transforming into a completelycustomer-centered company where thecustomer lies in the core of every of ourfunctions .
The transformation is made up of fiveelements:
Market leadership through customer loyalty Innovation Diversity with inclusion and core competencies Passion for customer excellence Operational excellenceWhirlpool has swiftly moved from being a World
Class Manufacturer to a World Class Marketerusing the brand-building framework.
d
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Vision and mission The pervasive vision of Whirlpool is
Every Home, everywhere,with pride, passion and performance .
This rests on the pillars of innovation,operational excellence, customer-centricapproach and diversified talent.
Market share and growth rate: Currently Whirlpool commands 25% of the
domestic refrigerator industry and tryingto achieve 27% by this year.
S t ti f k t
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Segmentation of market :The segmentation variables for
refrigerator market are Age/ lifecycle stage Marital status: eg: Refrigerator is a
very necessary household for newlymarried people. Social class and income.
Occupation: eg: Instant cool featureis convenient for working womenfamilies.
T ti d iti i
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Targeting and positioning:Whirlpool is targeting the women of
every Indian families and accordinglyit has successfully positioned itself asthe best home-maker in the world.
The positioning statement is You and whirlpooltheworlds best home maker
The USP for the frost free segment isits 6th sense cooling system whichautomatically adjusts the level of
cooling .
P od cts
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Products The products in refrigerator category
includesDirect cool :Low range products.
Product variants are named as
Genius.Frost control :Medium range products.Product variants are named asfusion.
Frost free:Premium and high capacityproducts. Product variants are namedas Professional, ice bergs ,
masterminds and delight.
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Whirlpool refrigerator Fusion is
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Whirlpool refrigeratorFusionisavailable in two models which isdesigned to operate even with an
irregular power supply, which is acommon problem in many Indiancities.Whirlpool has introduced new
Delight frost-free refrigerators ineight models in 230-L, 260-L and300-L capacities. A unique feature
is LED lighting, a white light that isevenly distributed and optimallypositioned to enable the contentsof the refrigerator to be clearly
visible even when it is fully loaded.
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PROMOTION and ADVERTISING
Promotio al a d advertisi g
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Promotional and advertisingstrategies :
Whirlpool spends six to seven times less inpromotion and advertising than thecompetitors like LG .
They have been spending the moneysmartly. Instead of giving ads every day,they are skewing their ads towardsweekends when the customers go to shops
and make enquiries. Their ads are frequently coming on days
such as Dussehra, Karva Chowth,Dhanteras, etc
Also they have done some smart
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Also, they have done some smartnegotiations with the major dailies andmagazines by taking a twelve-month
contract and blocking the primarypositions like front page or back page.
So they deal with competitors withgreater muscle power in terms of moneythrough smart buying and smarterplanning.
Regarding ads. the brand ambassadorsare Ajay Devgan and Kajol
Strategies for the coming festival
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Strategies for the coming festivalseason:
They are promoting the sixth sensetechnology which they are sayingthata womans sixth sensecaptured by technology.
For the coming Diwali season the
message is magicchalao dreamhome sajao
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Samsung India is the hub for Samsungs South West Asia Regional operations.
Responsible for Samsung business inNepal, Sri Lanka, Bangladesh,Maldives and Bhutan besides India.
Headquartered in New Delhi, Samsung India has a network of 20 BranchOffices and 40 Area Sales Offices located all over the country.
" With a total brand value estimated to be US$10.8billion, Samsung nowranks 25th in BusinessWeek's Top 100 Global Brands
Samsung India commenced operations in India inDecember 1995, today enjoys a sales turnover ofover US$ 1Bn in just over a decade of operations inthe country. Samsung has been the "fastest growingbrand in the world.
Samsung (2007-08)
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Samsung (2007 08)Samsung has launched nine new refrigerator models, both frost-free and direct-cool.
Samsung, which is the market leader in the over-350 litre frost-free refrigerator segment, is seeking to consolidate its position bylaunching three new, advanced, feature-rich models in 375 litres,400 litres and 704 litres in the Indian market. The companycurrently has a range of 42 frost-free models priced between
Rs13,000 and Rs 1.5 lakh.
In the direct cool refrigerator segment, the company has extendedthe category by introducing two new models of 180 litres and 195litres.
Expecting to expand refrigerator channel by 25 per cent this year.
Targeting a market share of 18 per cent in the refrigeratorsegment this year from 15.8 per cent last year.
Samsung p ans to reach out to more t er-IIcities Showcasing products in 135 cities this
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g pcities. Showcasing products in 135 cities thisyear against 120 last year.
The South had emerged as a key contributor tothe company's overall revenues.
The share of Southern sales has gone up from
24 per cent to 31 per cent, equaling thecontribution from the Northern States.
In a bid to cash in on the growing interest in
the South, the company has lined up 11`Dream Home' roadshows in the region thisyear. The number of `brand shops' would go upby 30 per cent from 82 currently.
PRODUCTS
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PRODUCTS
MobilePhones
GSMCDMA
TV, Video &AudioTV
DVD
CAMCODER
Audio
Home Theater
MP3
InformationTechnology Products
Monitors
Hard Disk Drive
Optical Disk Drive
Laser Printers
Fax
Home AppliancesWashing Machine
Refrigerator
Microwave Oven
Air Conditioner
Positioning
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Positioning Samsung positions itself as technology leader and not only as a
volume player and a price warrior.
Strategy is value driven, not price driven.
Expecting leadership on the basis of top quality, leading edgetechnology, priced competitively and backed by strong after salesservice,"
Global CEO Yun Yong's vision: "We want to be the Mercedes ofhome electronics.
The drivers this time at Samsung -- in fact, the company has putthese well above the traditional 4 Ps of marketing -- are designand innovation.
"Good designs and innovative technology will be the mostimportant differentiator for Samsung from competition
"If you are able to deliver the latest technology at an affordableprice, the consumer will not be willing to go back to outdatedtechnology
How many customers actually pay attention tob
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y y p ydifferentiation on the basis of technological innovationssuch as Twin Cooling or Silver Nano (for refrigerators),or even one based on design?
The sales staff at the showrooms are not able to pointout the key differentiators.
To tackle this issue, last year, the company started the
Samsung Marketing Academy, which conducts regulartraining programmes to educate the sales forces, shop-owners and company employees on the company'stechnology and design, how it is different from whatcompetitors are offering, and how to better explain the
difference to the consumer. By equipping the salespeople to sell knowledge-oriented
lifestyle products, the company is hoping to providecustomers a more informed buying experience, which
will translate into higher sales.
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Technology and Innovations Twin Cooling System- uses two independentevaporators that provide optimum level of coolingto the refrigeration compartment and thefreezer.
The i-Cool System- is an intelligent cooling systemwith three cold air outlets-at the back and on the rightand left sides of the refrigerator interior, resulting in allround cooling action.
Silver Fresh Technology- The Silver ions inside therefrigerator, achieve 99.9% removal of bacteria and createthe perfect environment to keep food super fresh.
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Direct Cool
Frost Free
Side By Side
Di t C l
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Direct Cool
Target : Middle Class
No. of models : 6.Available both in 180/200 ltrs. capacity.
PriceLow price due to high competition
Rs.8,700 to Rs.10,900
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Frost Free Refrigerators
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Category
Frost Free
(Less Than 350 L)
Frost Free
(Greater Than 350 L)
Frost Free
Bottom Freezer)
No. ofModels
6
6
3
Price
Rs.13,000-Rs.22,000
Rs.29,000-Rs.56,000
Rs.38,000 & Rs.56,000
Sid B Sid
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Side By Side
Target: Premium ProductTargetedat Niche Market.
No. of Models: 13
Capacity: 545 Ltrs to 880
Ltrs
Price: Rs. 56,000 Rs.
1,41,000
ENRICHING THE RETAIL EXPERIENCE
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ENRICHING THE RETAIL EXPERIENCE
To display Samsung products in a more lifestyle
ambience and to communicate the productbenefits in a more interactive manner,Samsung India has set up a widespreadnetwork of Samsung Digital Worlds, DigitalHomes and Digital Plazas all over the country.
The Samsung Brand shop network
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g pcomplements the over 8500 retail points forSamsung products located across the length
and breadth of the country. Samsung plansto continue enhancing its penetration levels inthe country to reach out to more and moreIndian consumers
RETAINING CUSTOMERS
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RETAINING CUSTOMERS
Samsung considers 'After Sales Service' as a keydifferentiator for Samsung products. In order to deliverprompt and easily accessible service, Samsung India hasset up a widespread network of company owned aswell as Authorized Service Centers to service itscustomers.
The Samsung Service Plazas, as the Company ownedService Centers are called, are a first in the industry.
.
The Samsung Service Plazas serve as a one-stopshop for Samsungs walk in customers
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shop for Samsung s walk in customers.Customers also get a chance to see the Samsungrange of products and interact with Samsung
product specialists to know more about thecompanys products and services.
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After Sales ServiceSpeed, Smile, Sure is the motto for Samsung Service, as theCompany seeks to satisfy more and more of its customers with
prompt and accurate service. A Service Helpline numbergives access to Samsung Service throughout the country. SamsungIndia organises a Free Service Camp on an All India basis,
every year, for proactively reaching out to customers and servicingtheir Samsung products.
10 second to loose a customer, 10 years to gainthem back forms the guiding principle for Samsung Service
Team as it strives to satisfy the growing expectations of Indiancustomers.
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Promotions
Future Scenario
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Future ScenarioWith easy availability of finance, emergence of
double-income families, fall in prices due to increasedcompetition, government support, growth of media,availability of disposable incomes, improvements intechnology, reduction in customs duty, rise intemperatures, growth in consumer base of ruralsector, the consumer durables industry is growing ata fast pace. Given these factors, a good growth isprojected in the future, too.
The penetration level of consumer durables is very lowin India, as compared with other countries. Thistranslates into vast unrealized potential.
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Demand and Penetration Level of
White Goods In India
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