2011-Indian-White-Goods-Industry-LG-Samsung
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Transcript of 2011-Indian-White-Goods-Industry-LG-Samsung
KOREAN CONQUEST:HOW LG AND SAMSUNG WON OVER THE INDIAN MARKETPresented by:
M. Arsalan Sheikh (#7989)
Ahsan Bham (#8106)
Sobia Khan (#6316)
CONSUMER DURABLES INDUSTRY:OVERVIEW
Fastest growing industry in India
Advertising and brand building has a key role
Demand is seasonal and cyclical
Price and brand differentiation
Technology driven
Continuous innovation
Supply and distribution network
High involvement in R&D activities
After-sales services
CONSUMER DURABLES INDUSTRY:PRODUCT SEGMENTATION
Consumer Durables Consumer Appliances Consumer Electronics
White Goods Brown Goods Mobile phones Televisions MP3 players DVD players VCD players
Refrigerators Washing machines Air conditioners Speakers and audio equipment
Mixers Grinders Microwave ovens Iron Electric fans Cooking range Chimneys
CONSUMER DURABLES INDUSTRY:PERFORMANCE
• Expected to drive the market to a value of $7.7 billion by the end of 2013, an increase of 60.7% since 2008. An anticipated CAGR of 10% for the five-year period 2008-2013
• In 2013, the Indian household appliances market is forecast to have a volume of 52.2 million units, an increase of 50.4% since 2008. The compound annual growth rate of the market volume in the period 2008-2013 is predicted to be 8.5%.
CONSUMER DURABLES INDUSTRY:CURRENT SCENARIO
In term of purchasing power parity (PPP), India ($3.55 Trillion) is the 5th largest economy in the world and overtake Japan in the near future become the 4th largest.
The middle class in India is fueling economic growth and disposable incomes are expected to grow at an average of 8.5% per year until 2015.
The urban market has now largely become a product replacement market.
CONSUMER DURABLES INDUSTRY:CURRENT SCENARIO
Indian consumer durable market is expected to reach Rs. 40 Billion by on 2010
The Indian household appliances market grew by 32% in 2010.
The top 67 cities in India are the key potential markets for appliances. These cities contribute 14% of the GDP.
The market share of MNCs in the consumer durables sector is 65%.
CONSUMER DURABLES INDUSTRY:RURAL MARKET
The rural market is growing faster than the urban market.
Rural sector offers huge scope for consumer durables industry, as
it accounts for 70% of the Indian population.
The urban market and the rural market are growing at
the annual rates of 7%-10%and 25% respectively.
Rural areas have the penetration level of only 2% and
0.5% for refrigerators and washing machines respectively.
In case of television the penetration level is 18%.
CONSUMER DURABLES INDUSTRY:CURRENT SCENARIO
CONSUMER DURABLES INDUSTRY:BRANDS
MNCs National Regional Korea o LG o Samsung o Hyundai
Onida Videocon BPL Kelvinator Allwyn Godrej Voltas IFB
Bush Crown Salora Weston Beltak Oskar
China o TCL o Haier
Holland o Phillips
Japan o Sony o Panasonic o Sharp o Hitachi o Sansui o Akai o Aiwa o Whirlpool o Electrolux
CONSUMER DURABLES INDUSTRY:WHITE GOODS
1995-1996 2005-2006 2009-2010
Demand 3.43 million 8.72 million 13.14 million
Penetration level 149 per 1,000
households 319 per 1,000
households 451 per 1,000
households
CONSUMER DURABLES INDUSTRY:MARKET SEGMENTATION
Demographic
Income
Occupation
Geographic
Tier 1 Cities
Tier 2 Cities
Psychographic
Life style
Personality
Behavioral
Value
Benefit sought
DEMAND & GROWTH DRIVER
Personal Income
Availability of financing
Product affordability
Increasing share of organized retail
Entry of heavyweight retail players
Increasing appreciation of the Rupee
Technological and design advancements
Innovative advertising and brand promotion
CONSUMER DURABLES INDUSTRY:WHITE GOODS
CONSUMER DURABLES INDUSTRY:COMPETITIVE STRUCTURE
COMPANY PROFILE
Situation
LG Electronics India Pvt. Ltd., a wholly owned subsidiary of LG Electronics, South Korea was established in January 1997 after clearance from the Foreign Investment Promotion Board.
Growth Strategy
Focused on innovative, feature-rich products –”Value-plus” platform
Offering affordable products at a lower margin –cutting on volume to bring in revenues
Key Success Factors Innovative marketing strategies
LG has differentiated its products using technology and health benefits.
Local and efficient manufacturing to reduce cost
Implementing a “digital manufacturing system” (DMS) as a cost-cutting innovation.
Product localizationLG came out with Hindi and regional language menus on its appliances
Regional channel strategy and wide distribution network
LG has over 46 branch offices and 110 area offices across the country.
COMPANY PROFILE:
ObjectivesThe aim of LG is to provide the customers with utmost
satisfaction through leadership.The fundamental policy of development is to secure
product leadership that the Customers may have the utmost satisfaction.
Core Competency Product leadership, Market leadership, People leadership
COMPANY PROFILE:SWOT ANALYSIS
Strength Market leader in home
appliance segment Manufacturing unit in tax-
incentive areas Wide range of product
categories to tap the consumer upper-middle class and upper-upper class
LG, having the widest distribution network in the industry
Good after-sales services
Weakness
Consumer compare LG
products with its
competitor Samsung and
Sony, not with other
foreign brand
Similar product categories
as compare to its close
competitors Samsung
COMPANY PROFILE:SWOT ANALYSIS Opportunity Shifting to rural market
Control over the white goods market, as we know the highest market in home appliance market
Home appliances market is growing very fast, so there is an opportunity for LG to launch new technological products.
Threat
The closest competitors Samsung is also from South Korea, and consumer compare LG products with Samsung products
Price-against-benefits war with its closes competitors, Samsung & Sony
Competitors from Indian brand and new entrants.
COMPANY PROFILE
Situation
Samsung India Electronics Ltd. is a subsidiary of Samsung Electronics Corporation (SEC) headquartered in Seoul, Korea. Samsung India was formed in 1995.
Growth Strategy
Building an affluent customer base –higher priced products
Creating a premium brand image –design and technology innovations
Key Success factorsInnovative promotion and advertising
Branded its products as superior technology and environment friendly ones.
Launching the best in design and technology
Samsung has won over 150 awards in India for its technology and design based products.
Customized products for its consumers
understands the local cultural sensibilities to customize its products according to the market.
Manufacturing plant and localization
COMPANY PROFILE
Objectives
Samsung aims to become India’s leading volume retailer in the consumer electronics segment
Achieving its aim by focusing on its Core Strategy
Work on strengthening its unique Brand Image
Gaining Customer Satisfaction
Core competency
Technology leadership
COMPANY PROFILE:SWOT ANALYSIS
Strength Core value: Approach
market through technology and design leadership
Launching hi-tech and contemporary products with zeal and speed
Created a Unique Brand Image for itself as a high end value driven brand
The Samsung Marketing Academy
Weakness Approach market through
technology and design
leadership: a slow process.
Not targeting the mass
market
Not spreading the brand
all over India
COMPANY PROFILE:SWOT ANALYSIS
Opportunities The Indian Mass Market.
The high end value driven
proposition helps increase
the Market Share.
Samsung is well known for
it product differentiation
Threats Indian Mass Market may
be captured by a rival company, LG, Onida, Videocon;etc.
Increased emergence of modern retail chains- a problem as Samsung is investing in building a retail network across the country
COMPETITOR ANALYSIS
Localized positioning
Focus on local R&D Range of products in a
wide range Dealer network is very
strong Many products specially
for India Positioning on a global
basis Centralized R&D Lesser Range of
products Dealer Network not as
strong Less Indian Customer
Centric products