Project on Different Strategies taken by Videocon as an Electronic

Company

By

Udit Pridhani (JL13PGDM184)

Vasvee Gupta (JL13PGDM122)

Shalini Srivastava (JL13PGDM044)

Vanya Chaturvedi (JL13FS61)

Prasenjit Basu (JL13PGDM153)

Table of Contents

Acknowledgement...................................................................................................................................................2ABOUT VIDEOCON.............................................................................................................................................3

Organizational Structure:....................................................................................................................................4PRODUCTS OF VIDEOCON............................................................................................................................5

ACHIEVEMNTS OF VIDEOCON INDUSTRIES LTD(“VIL’)...........................................................7KEY GROWTH INDUSTRY DRIVERS.......................................................................................................8HISTORY OF THE INDUSTRY......................................................................................................................9

MARKET OVERVIEW.....................................................................................................................................10

INDIA’S CONSUMER MARKET.................................................................................................10

CONSUMER CLASSES..................................................................................................................10

CURRENT SCENARIO IN INDUSTRY.....................................................................................................12

Top 10 players of consumer durables sector..................................................................................12

EVOLUTION OF VIDEOCON.......................................................................................................................14

Macro Environment Analysis of the company:..........................................................................................15VIDEOCON LONG TERM AND SHORT TERM STRATEGY........................................................17

MULTI BRAND SHOPPING CART.............................................................................................19

THOMSON VIDEOCON DEAL....................................................................................................20

SERVICE DRIVE............................................................................................................................22

EFFICIENT PROCESS...................................................................................................................22

EFFECTIVE PROMOTIONAL STRATEGIES..........................................................................23

IN SYNC WITH THE LATEST TECHNOLOGY.......................................................................24

CRITICAL ASSESSMENT OF PAST STRATEGY...............................................................................25

CURRENT STATE OF AFFAIRS AND STRATEGIES.......................................................................27PORTER’s 5 MODEL analysis of company................................................................................................30FUTURE PLANS..................................................................................................................................................33REFERENCES.......................................................................................................................................................34

1

Acknowledgement

This project is done as a final project on Strategies taken by Videocon Pvt. Ltd.

Words are only representations of our regards and gratitude that we have towards our actions and

their inherent associations. As a matter of fact, without co-operation, no thought could be coined

into real action. Consistent motivation and invaluable support throughout any project is an issue

that cannot quantitatively be measured. These acknowledgements are only a fraction of regards

towards their gestures.

We extend my sincere thanks to Dr. V.V. Ratna for giving us an opportunity to work on this

project. During this tenure we got to know about the Company Videocon Pvt. Ltd. well. We

learnt about the organization and the strategies taken by them to compete and survive in the

market.

We would also be thankful to Library persons of JAIPURIA INSTITUTE OF

MANAGEMENT, Lucknow who provided us with necessary books and material during

the working of the project.

2

ABOUT VIDEOCON

Videocon is an industrial conglomerate with interests all over the world and based in India. The

group has 17 manufacturing sites in India and plants in China, Poland Italy and Mexico. It is also

the third largest picture tube manufacturer in the world. The Videocon group has an annual

turnover of US$ 4.1 billion making it one of the largest consumer electronic and home appliance

companies in India.

Videocon was footed in 1987 by Nandlal Madhavlal Dhoot. At that time it used to manufacture

TV and washing machine. In 1989-90, Videocon started manufacturing Home entertainment

systems, Electric motors and A.C. Videocon entered Refrigerators and coolers segment in

1991.In 1995, Videocon started manufacturing glass shells for CRT and in 1996 it ventured into

Kitchen appliances and crude oil segment. In 1998, Videocon started manufacturing compressors

and compressor motors, in the year 2000, it took over Phillips color TV plant in 2005, Videocon

took over 3 plants of Electrolux India and acquired Thomson CPT. Today, It has evolved into a

giant conglomerate with annual revenues of over US$ 4.1 billion.

3

Organizational Structure:

4

PRODUCTS OF VIDEOCON

Consumer electrical 7 home appliances:

Videocon enjoys leadership position in consumer products like Color Television, washing

machines, Air Conditioners, refrigerators, microwave ovens and numerous other home

appliances. Videocon’s refrigerator manufacturing enjoys synergy with its in-house compressor

manufacturing technology in Bangalore.

Display industry & its components:

After the acquisition of Thomson in 2005, Videocon has emerged as one of the largest Color

Picture tube manufacturers in the world. It has plants in Mexico, Italy, China, Poland and

manufactures a range of high-tech products such as slim CPT, extra slim CPT and High

Definition 16:9 formats CPT.

Color Picture tube glass:

Videocon is one of the largest CPT Glass manufacturers in the world. It has plants in Poland and

India. Videocon’s CPT Glass manufacturing complements its Color Picture tube manufacturing

business.

Oil and Glass:

Videocon Group has interests in oil and gas exploration, prospecting and intends to get into gas

distribution. It produces 7% of all oil in the private sector in India. Videocon’s Ravva oil field

has one of the lowest operating costs in the world and it produces 50000 barrels of oil per day.

Videocon is also actively looking for exploration and production opportunities in the countries

like Oman, Australia, and the Timor Sea near Indonesia.

5

Telecommunication:

Videocon telecommunication Ltd has licensed for mobile service operation in India. It launched

its service on &march 2010 in Mumbai.

Mobile phones:

In November 2009 Videocon launched its new line of Mobile phones.

6

ACHIEVEMNTS OF VIDEOCON

INDUSTRIES LTD (“VIL’)

India’s No.1 consumer electronics 7 Home appliances company. It is also the third largest

picture tube manufacturer in the world.

The largest panel production facility in the world under one roof providing very high

economies of scale

One of the world’s largest and most respected CRT glass manufacturers.

Firing the largest furnace of its kind in the world with the tank size of 3300 sq. ft.

One of the few companies in the world to convert sand into TV.

One of the largest and most acknowledged CPT manufacturers in the world.

Manufactured India’s first rust –free washing machine.

7

KEY GROWTH INDUSTRY DRIVERS

Rising income levels and increasing affordability, fuelling consumerism and growth in demand

for aspirational goods.

Change in perception of consumer goods as “basic necessities” as opposed to “luxuries” largely

driven by increased awareness and advertising.

Rationalizing of prices by key players, due to conducive tariff policy by the government.

Increasing demand for technology driven replacement of consumer goods and household

appliances.

The consumption of Television from the company has risen to 20% from 17 % whereas washing

machines had risen to 25.1%.

8

HISTORY OF THE INDUSTRY

The electronics industry in India took off around 1965 with the orientation towards space and

defense technologies. This was rigidly controlled and initiated by the government. This was

followed by developments in consumer electronics with transistor audios, black and white TV

etc. Colored television soon followed. In 1982 the government allowed thousands of color TV

sets to be imported in to the country to coincide with the broadcast of Asian Games in New

Delhi.1985 saw the advent of computers and telephone exchanges, which were succeeded by

digital exchanges in 1988.The period between 1984 and 1990 was the golden period for

electronics during which the industry witnessed continuous and rapid growth.

From 1991 onwards there was first economic crisis triggered by the Gulf War, which was

followed by political and economic uncertainties within the country. Pressure on the electronic

industry remained though growth and development continued with the digitization in all sectors

and more due to convergence of technologies. In 1997 the ITA agreement was signed by WHO

where India committed itself to total elimination of all customs duties in IT hardware by 2005.In

subsequent years, a number of companies turned sick and had to be closed down. At the same

time companies like Mosar Baer, Samtelcolor, Celectronix, etc. have made a mark globally.

9

MARKET OVERVIEW

The global electronic industry is growing rapidly. From an estimated of US$950 billion in 2005,it

is estimated to grow to nearly US$2100 billion by 2010.The market is dominated by Asian

countries like China, Taiwan, Singapore and South Korea. The industry is characterized by raped

innovation and speed to market, short product life cycles, highly automated manufacturing to

give consistent quality at low cost, high volume production, continuous improvement in

capabilities for reducing costs and profit accrual through volumes. India’s electronic industry is

nascent by global standards. Despite a population of over one billion, India has a relatively small

electronics market. It is ranked 26th worldwide in terms of sales and 29th in terms of production.

The total size of the industry in 2004-05 was US$11 billion.

INDIA’S CONSUMER MARKET

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 5 figures, based on annual household income(based on

1995-96 indices).These groups are: Lower income; three subgroups of Middle income and

Higher income.

CONSUMER CLASSES

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) has released an alternative classification system based on consumption indicators,

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

1 0

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

which differ considerably in their consumption behavior 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.

1 1

CURRENT SCENARIO IN INDUSTRY

Growth of consumer durables in 2009-10

CONSUMER DURABLES GROWTH

Refrigerators 5-10%

Air conditioner 20-25%

Microwave oven 25%

Washing machine 5-10%

CTVs 15-20%

Clock 10%

Watch 10%

VCDs 30%

B&W TVs -20%

Consumer Electronics(Overall) 9%

Top 10 players of consumer durables sector

Nokia India Whirlpool Appliances

LG Electronics India Ltd Siemens

Phillips India Sony India

Titan Industries Videocon Industries

Samsung India Electronics Blue Star

THE CONSUMER DURABLES MARKET in India is valued at US$ 4.5 billion currently. In

2008,microwave ovens and A.Cs registered a growth of about 25%.Frost free refrigerators have

seen a considerable growth as many urban families are replacing their old refrigerators. Washing

machines, which have always seen poor growth, have seen reasonable growth in 2006.More and

1 2

more Indians are now buying electrical appliances due to change in electricity scenario. The

penetration level of CTVs is expected to increase 3 times by 2008

In recent years, the market for televisions in India has changed rapidly from the conventional

CRT technology to Flat Panel Display Televisions (FPTV).

Currently, the split between CRT and FPTV is around 97% and 3% respectively. One of the most

striking changes sweeping across the CTV market is the exponential growth of the FPTV market,

in common parlance called the liquid crystal display (LCD) and plasma televisions.

Looking at the present scenario, the LCD prices have been dropped by around 30% annually.

Some of the important factors include the increasing awareness of the advantages of LCD TV,

the growing availability of the product across dealer counters and the Finance schemes in the

market. Besides this, as a manufacturing hub, the TV industry is improving more and

more .There are many domestic and MNCs that have increased their production bases in the

country. East availability of low-skilled labor and the emergence of SEZs, which are tax-free

zones, are some of the key factors that have results in growth of these manufacturing units. In

fact, encouraged by tax-breaks, new manufacturing units are coming up in less developed regions

now.

Today, India is one of the few emerging countries to have a excellent component supply base in

terms of manufacturing facilities for glass and color picture tubes, so it helps it a good choice for

all those companies who are looking to take benefit of this emerging market.

1 3

EVOLUTION OF VIDEOCON

2000: Acquisition of Phillips color TV plant

2005: Acquisition of Thomson and Electrolux

2009: Venture into telecom and mobile services

2010: DTH

1 4

Macro Environment Analysis of the

company:

To flourish in the competitive market the company has to come up with some strategy. For that

purpose one has to go for its environmental scanning.

PEST Analysis:

1. Political Factors

Labor unions effects a lot the production

Resolution to reduce emission of carbon footprints in the atmosphere

Anti-dumping duty on imported color picture tubes

2 . Economical Factors

Growth of retail sector ± expected to reach 16% by 2011-12from 4% in 2007

High investments are needed in the consumer durables

Emergence of organized retail market with large players like Croma, Next, Reliance

Digital – leading to lower prices and higher varieties

3 . Social Factors:

Changing perception of luxury to necessity

In rural areas there is poor infrastructural facilities like availability of electricity

Demand of the consumer durables is seasonal and cyclic

Highly growing consumer durable market

1 5

4 . Technological Factors:

Improved electricity consumption

Technology is changing at a very fast rate

Higher quality product

1 6

VIDEOCON LONG TERM AND SHORT

TERM STRATEGY

Videocon’s business strategy had been based on a low-cost high-turnover. Being one of the

largest manufacturers of television and its components, Videocon had the advantage of

economies of scale and low cost due to indigenisation. However, with the considerable fall in

import duties on CPTs, the cost advantage of Indian manufacturers including Videocon was on

the decline. Although the company focussed on the low-end, low-tech and first-time-buyer

segment, it also adopted a multi-brand strategy so as to cater to various market segments and

make optimum use of its deep-rooted distribution network in India. Videocon faced stiff

competition from big branded players like LG, Samsung and Haier following India’s economic

liberalisation.

Videocon’s massive production capabilities at geographically diverse locations placed it among

the leading contract manufacturers to major global brands. Image of Videocon had been that of a

brand in low to medium price segment whereas the MNEs relied heavily on their cutting edge

technology and global image. Videocon adopted a multi-brand strategy to benefit from scale

economies in manufacturing and distribution. This was done by forging tie-ups with several

global brands to serve the needs of all customer segments in the low-end, middle class and even

in the up market.

Apart from the flagship brand Videocon, the company housed about ten brands like Toshiba,

Sansui, Akai and Hyundai, catering to almost 30 percent of the entire Indian market. Videocon

acquired Akai India, from Baron International in 1999, but could only manage to sell a few

products at select dealer outlets in small towns. It also bought manufacturing and marketing

rights of Hyundai electronics in 2005 for the high-end consumer durable range but Hyundai

could not compete with other Korean brands such as LG and Samsung, which enjoyed

tremendous brand equity in India. Multiplicity of brands at the same price point also led to

cannibalisation of sales among the brands. For instance Sansui competed in the same price

1 7

segment of company’s umbrella brand, Videocon, leading to erosion of its market share. Over the

years Videocon, the group’s mother brand slipped in the Indian market and found it difficult to

compete in the high-end space. At best, it was positioned as a main market brand. This led to a

state of diffused positioning for its brands.

1 8

MULTI BRAND SHOPPING CART

Over the years Videocon’s tactic was to buy distraught over the world and revive them by

making low and elsewhere.

Videocon International was the first Indian company to adopt the strategy of multi-brands.

Apart from its mid-priced brand Videocon, the company now hawks Toshiba, a premium

brand, and the low-priced brands Akai and Sansui. The multi branding technology paid off as

Videocon managed to hold on to a combined market share of around 19.6 percent, with LG at

25.9 percent and Samsung at around 13.8 percent.

Overall, the shift in the power to trade is probably one of the defining developments. It is

important since the TV companies themselves have taken it seriously and embarked on

crafting longer-term strategies to accommodate this development. The effectiveness of their

strategy and the responses of the other players promise to deliver a few more years of

enterprising developments in the Indian TV market.

Consumers depending on their annual income will switch onto different brands from time to

time.

1 9

MULTI BRAND

SHOPPING CART

KELVINATOR SANSUI

AKAI

KENSTAR

ELECTROLUXTOSHIBA

HYUNDAI

NEXT

KENWOOD

VIL’s study reveals that spotlight on the brand will not cater to different segments of the

market .VIL thus serves a range of products through its multi brand-shopping cart.

VIL’s multi-brand plan has assisted company to achieve a place at top of the podium with

30% market share.

VIL is triumphant in churning loss making brands to productive integrating them with its

existing manufacturing plants.

VIL is the only domestic company to survive successfully due to its diversified product

portfolio.

Backward Integration: Videocon integrated backwards by getting into manufacture of

components such as electron guns, metal parts and deflection yokes for CTVs and

compressors, and electric motors and plastic components for households appliances such as

washing machines, refrigerators and Air conditioners. The group integrated further to get in to

manufacture of glass panels and funnels, the key components for the manufacture of color

picture tubes.

“Videocon enjoys a unique synergy in the global CTV business from glass to CRT (Cathode

Ray tubes) to CTVs. - (From Sand to CTV). Together with other components for households

appliances. This high degree of backward integration bestows upon the company a unique

benefit over competition.

THOMSON VIDEOCON DEAL

VIL is only one of its kinds in the world to convert sand into TV.

VIL has led to discovery of world famous technologies like Super Flat CPT, Slim CPT, and

Extra Slim CPT&HD 16:9 format CPT. VIL had bought debt free Thomson’s CPT division.

Clientele includes TTE, Sanyo, Sharp, JVC, Konka, Skyworth, Beko, Vestel, TTE &

Horizont.

VIL has access to Thomson’s R&D facilities which facilitated up gradation of technology.

VIL’s integration of glass shell unit with Thomson CPT enabled it to enjoy cost benefit in

terms of production cost& it will also reduce throughput time.

2 0

VIL’s strategic partners Thomson & Electrolux both acquired 15% & 5% stake respectively

in VIL showing signs of faith in top drawer of the company.

VIL-Thomson synergy has devised a bunch of strategies for its cost, production, sales &

industry to register them glass shells manufacturer in the world..

EXPERIENCE CHANGE: A new brand identity & logo

Videocon group recently underwent a brand identity change. The group, which has been

serving the nation for nearly the past 25 years, took move in tunes with the changing global

scenario.

Videocon as a brand always believed in re-inventing and revamping itself and the rationale

behind Videocon’s brand evolution comes from its constant endeavor to listen and respond to

the changing market dynamics in India and overseas.

The focus remains multifold while working towards developing the latest technologies with

an emphasis on quality, innovation and value, the firm is aggressively expanding their service

penetration too. The “V” in the new Videocon logo is representative of a new identity-an

identity that is fresh, dynamic & has been provided a life of its own.

Videocon’s all new brand identity is the first step to position its Brand Videocon closer to

every customers’ heart- in terms of the philosophy behind products, their value perception,

enhanced ownership pride and class-leading after-sales delight.

EXPERIENCE CHANGE: With Videocon’s Retail Chains in Various Cities

Videocon group is on a retail drive, and the company’s belief in the ‘Customer First’ mantra

has been the motivating factor behind this initiative.

It has introduced its retail chains Videocon Plaza, Digiworld and more recently Digihome

meant for smaller stores.

These outlets have further ensured easy availability & access of the Videocon group to its

customers.

Videocon plaza is a chain, which offers a complete range of the brand Videocon available

across all product categories. Currently, the company has around 25 such outlets, which are

available in all major states and aims to raise the network of these plazas in the coming

months.

2 1

Digiworld is a multi brand outlet, showcasing all the leading brands from the group namely

Videocon, Sansui, Electrolux, kenstar and kelvinator under one roof. It boosts of wide range

of products in various categories under all the brand sat optimal prices. Videocon group has

around 100 digiworlds.

Digihome are an extension of the Digiworld chain, featuring the same brands. However, it’s

meant for smaller stores and will house perhaps only two to three of suchbrands. A new look

& logo has been designed and the company is set to open around 150 digihome stores

nationwide.

This move of the company has further proven its commitment to its customers by being

available for them all around.

SERVICE DRIVE

Service is the most important aspect for any business to thrive and sustain itself successfully

and Videocon is one such company who is adamant on providing the best of services to its

customers.

A drive has begun and Videocon group has pledged to make its services at par with

international norms and put customer requirements to fore. The group opened ‘MODEL

SERVICE CENTRES’ in all branches, which would set benchmark of customer service in the

consumer durable industry.

The first such centre was inaugurated in Gurgaon and around 20 more towns are recognized

in the major cities of the country, namely Kanpur, Jaipur, Lucknow, Ludhiana in North,

Chennai, Hyderabad, Bangalore, Coimbatore, Cochin in South; Mumbai, Ahemdabad, Pune,

Surat and Nagpur in the west; Kolkata, Patna, Asansol, Guwahati and Jamshedpur in the East

region.

EFFICIENT PROCESS

A single toll free number has been introduced and the company has adopted a unique 2-2-2

service approach, wherein the group pledges to attend, sort problems and replace defective

2 2

products. The aim is towards providing quick response, immediate registration of query,

attending & trying to sort the problem within 2 days.

A fleet of service vans has also been designed to meet the requirements of the customers pan

India. Videocon has currently around 120 such vans, which are equipped with tools,

equipment, inverter and even spare parts to provide uninterrupted support & supply even in

upcountry locations.

Free service camps are organized on a regular basis across the country. These camps facilitate

a better understanding by the company on the problems faced by the consumers and readily

offer them a solution.

Special offers are also given to customers like exchange of an old model with a newer version

at nominal prices, no labor charges, discounts on genuine parts & accessories and Annual

maintenance contract.

The company has also set up a training academy for enhancing the technical & soft skills of

its ASC engineers. A spare part hub has also been opened in the north.

It’s commitment with the group, to provide its customers with an efficient after sales service,

thus, ensuring a hassle free and enjoyable product experience.

EFFECTIVE PROMOTIONAL STRATEGIES

SPECIAL OFFERS

FIFA WORLD CUP MANIA GRIPS VIDEOCON-they lined up to bring a world-class

experience into their living rooms by availing Videocon’s ‘Striker Offer’.

DOUBLE BONANZA, DOUBLE MAZAA-“paisa vasool’ provided a never before

opportunity to own a world class Videocon satellite LCD that combines the twin benefits of

free Videocon d2h service for 2 years worth Rs 9000 plus a money back scheme. Under this

scheme, customers got a chance to enjoy benefits worth Rs.20000 on the purchase of

Videocon satellite LCD worth Rs 25990.

2 3

EFFICIENT ADVERTISING

VIDEOCON’S WOMEN CONNECT-Videocon’s revolutionary new range of washing

machine which have been designed entirely keeping in mind in convenience factor of a end

customer, has already started creating ripples in the industry. The company with its customer

centric approach has hired special Female promoters, which are dedicated only to promote the

sale of washing machines.

IN SYNC WITH THE LATEST TECHNOLOGY

Videocon continuously launched new product in each product line to gain, maintain and retain its

customers. This year Videocon launched tilt drum washing machine, it is India’s first model with

tilt drum. Windows enabled mobile phone by which Videocon entered the smart phones

market.VIL even launched 3D TV sets.

2 4

CRITICAL ASSESSMENT OF PAST

STRATEGY

The Videocon is a major player in India’s consumer electronics sector. The Videocon group’s

turnover was Rs 7.23 billion in 1993.In addition to CTVs, B&W TVs and audio systems, VIL

markets washing machines, refrigerators, Coolers, ACs (made by Videocon appliances) and

video systems(made by Videocon VCR) on a no-profit no-loss basis used as a penetration and

market share expansion strategy. The business management ethos of ‘generating surplus’ was set

aside by Videocon just to ‘generating surplus’ was set aside by Videocon just to the market.

The company believes that the only strategy for satisfaction and leadership through quality and

innovation, technology and performance. The Videocon group is also the 2nd largest marketer of

audio products with its also the 2nd largest marketer of audio products with in consumer

electronics and home appliances, with 19 state of the art manufacturing facilities all over India,

manned by skilled and dedicated employees.

In 1997,Videoocon’s quality achievements have enabled it to look beyond India, earning the

highly prestigious CE mark for exporting its Color TV to Europe-the 1st emerging as an

international player. Apart from making products for Toshiba and Sansui for their global

markets. Videocon has become a house hold name as most upper middle and middle class people

identify its products, thanks to its huge spending in advertising and its strategies to penetrate into

semi-urban and rural areas in a big way, considerable period (almost 5 years) bears testimony to

the success of its strategies to attract the customers.

In 1995,Videocon launched an ad campaign to further its standing in the Indian electronics

industry by promoting its wide range of consumer electronics. While the headline proudly

declared that Videocon is ‘ exploring the most advanced technologies to give you the world’s

finest consumer electronics and home appliances’, the slogan at the bottom of the advertisement

invited readers to “bring home the leader”. The sub heading below the headline, also

highlighted in a bold typeface, proudly announces, ‘Videocon, A household name’. Two other

2 5

sub-headings, listed above the slogan ‘Bring home the leader’ declare that Videocon is ‘

Bringing the world to India’ and ‘Improving the quality of Life’. In another sense, the slogan

appears to invite the reader to embrace a new nationalist strategy of bringing into India ‘a wide

range of quality products’ made by Videocon in collaboration with world leaders in the

electronics industry. Videocon celebrated its ‘tie ups with world leaders ‘in the electronics

industry as a corporate philosophy for “improving the quality of life” in India.

2 6

CURRENT STATE OF AFFAIRS AND

STRATEGIES

COMPANY ACTIVITY COLLABERATIONS

Videocon

International Ltd

TVs Toshiba Corp. ,Japan

VIL Audios Sansui

Videocon VCR Video Systems Toshiba Corp., Japan

Videocon Appliances Washing Machine

Refrigerators

Coolers

ACs

Matsushita

Electric Ind Co., Japan

Videocon Leasing Finance activities None

Videocon Narmada None OLI-NEG TV

Product.US

Videocon has recently gone through a complete brand through the change in its logo from

sturdy steel. This new brand element was recently unveiled by Bollywood superstar Shahrukh

Khan in LA. To communicate makeover, Videocon has launched new marketing campaigns

with two green colored animated characters which join to form the new V logo. The choice of

green color is deliberated to get into the peppy bandwagon of ‘going green’ initiatives’

recently adopted by many other organizations. Though this has been substantiated by their

upcoming %MW solar power project in Jodhpur.

According to the company’s official website” The Videocon logo is the heart of the new

brand identity”. The Fluid lava reflects the brand idea “EXPERIENCE CHANGE”. The color

palette has been chosen to reflect the philosophy of Videocon Group i.e.; the color green is

2 7

symbolic to the company’s ecology drive. With current portfolio of consumer electronics and

home appliances, Videocon is also going to foray into new unchartered territories of mobile

services.

From a marketer’s perspective, it is important to understand whether these Revitalization

change amount to brand revitalization strategy or is it merely brand strategy or is it merely

brand suggests, is to maintain consistency.

But it may involve many tactical changes necessary to maintain the strategic thrust and

direction of the brand. In the case of Videocon’s brand it is indeed a revitalization strategy

and can be understood from Brand Revitalization Model as explained below.

STRENGTHS:

India’s no.1 brand of consumer electronics and home appliances.

Customer base = 50 million

Large brand market

Multi brand strategy

Global network-17 manufacturing sites in India and plants in China,Poland,Italy and Mexico.

#rd largest picture tube manufacturer in the world.

An important asset for the group is its oil field of the lowest operating costs in the world

producing 50000 barrels of oil per day.

WEAKNESS:

Wide brand basket, which might lead to conflict of interest unless effectively managed.

Entirely involved in conventional 20th century products, virtually failing to establish a

significant web presence in online sales and marketing.

CRT technology is losing popularity.

OPPORTUNITIES:

Avenues for expansions in the untapped market for LCD/Plasma screen display in India.

2 8

Acquisitions/tie-ups with other MNCs in the consumer electronics segment looking to enter

the Indian market.

Consolidate position as 3rd largest manufacturer of picture tubes in an industry where small

manufacturers are phasing out operations due to technological shifts to LCD.

Strengthen and expand retail network like “NEXT” chain of stores.

THREATS:

Decreasing market demand for CRT’s because of technological shift to LCD screens.

Stiff competition due to influx of MNCs

Competition from cheaply produced Chinese goods.

Fall in the market demand due to economic recession.

2 9

PORTER’s 5 MODEL analysis of company

Threat to Entry

Entering the CTV market isn’t very easy. One of the most important features needed is a good distribution

system, which isn’t something that can be developed overnight.

 

Also a television today is a style statement. Therefore the brand plays an important role in

influencing the purchase decision. For a new company then entering this market, not having a

recognized brand name is a threat to entry.

Rivalry among existing firms

There is strong competition among the current players. The main players are LG, Samsung,

Onida, Videocon, Philips, Sansui. Some of the regional players are-Hyundai and Haier are new

entrants in the CTV space in addition to a number of small regional players.

This increased competition has ensured that advertising costs are an integral part of the

players’ total cost. A lack of product differentiation means that price is a competitive feature

that intensifies rivalry. The highest price reductions during 2002-03 to 2005-06 were in the 20inch

and 21inch CCTV category.

With the future being in LCDs, this market is likely to see price reductions future.

It is expected that realizations will fall with increased competition.

3 0

Bargaining Power of Buyers- 

The TV market today is a consumer’s market where the consumer has the upper hand with him having the

power of choosing from a variety if brands.

This bargaining power of the buyer has forced the players to offer credit facilities on sale, to provide lower

EMIs and excellent after-sales service.

Threat of Substitutes

 

For a television, the substitute can only be a functional substitute. The functional use of a

television is to watch programs, live events etc. This today can also be done on a computer.

Theaters too can be a substitute to watching movies at home.

Today with various multiplexes and theaters providing screenings of live events such as sports

telecasts etc. along with the luxury of good food and the opportunity to enjoy the event with a number of

other enthusiasts, the TV can be substituted if the TV is bought only to watch certain events.

However if the television on considered to be a style statement and a lifestyle statement, then

consumers will seek to keep upgrading the type and the model of their television sets.

Bargaining power of Suppliers

PCBs (Printed Circuit Boards) & CRTs (Cathode Ray Tube) are key raw materials in the

production of CTVs.

CRT accounts for 46-48 per cent of the total raw material costs of a CTV. PCBs and housing

components account for 33-39 per cent of total raw material costs.

3 1

Domestic CPTs prices tend to follow Global price trends. Therefore the suppliers do not have

much of bargaining power in this regard.

Cabinets are sourced from plastic manufacturers and as these manufacturers supply to

different industries, they therefore do have a bargaining power, especially in comparison to

CRT suppliers.

3 2

FUTURE PLANS

To strengthen and maintain its leadership status, the Videocon group has clearly charted out its

course for the future. Aggressive development is in full swing at the R&D centers to bring gout

state of the art technologies including True Flat, Slim, Extra Slim, and Plasma& LCDs at the

earliest.

Cost rationalization processes-are in various stages-including rationalizing factories in Europe,

increasing automation and improvement of efficiency in China, accessing glass shells from India

for international CPT facilities and a lot more-are in various stages of implementation.

Internationally all existing client relationships are being strengthened .The cost competitiveness

and increase in capacity in Mexico and Poland has opened up big opportunities in the OEM

business.

Last but not the least, in the domestic market consolidation with multiple brands paves the way

for an unassailable lead in the market.

In the Oil& Gas business, having all the basic operator capabilities of a processing entity the

group is looking to add more explorations and production depth as also oil-bearing assets. The

group will also get into distribution in India significantly.

3 3

REFERENCES

‘Vision’ Videocon’s quarterly magazines

Videocon industries limited annual report

http:/www.wikipedia.org/wiki/Videocon

CMIE Report

3 4