24272151 Project Report Fmcd Final

7/28/2019 24272151 Project Report Fmcd Final

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PROJECT REPORTON

THE CHANGING INDIAN CONSUMER

DURABLES INDUSTRY-AN OUTLOOK

SUBMITTED TO:

Prof. Samarendra Mahapatra

INSTITUTE OF MANAGEMENT AND INFORMATIONSCIENCE

BHUBANESWAR

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ACKNOWLEDGEMENT

This report is an outcome of mutual support and

guidance of many persons towards whom I am indebted. I express my profound reverence and

heartfelt gratitude to Prof. S.Mahapatra who

suggested me proper guidelines towards the

project and for his unconditional co-operation

and kind suppor t in preparing the repo rt and

doing the activities required for the same.

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7

SL.

TABLE OF CONTENTS

NO. HEADINGS PAGE NO.

1 OVERVIEW 41.1 Key Growth Drivers for Consumer Durables 41.2 Major Hurdles and Challenges 52 INDUSTRYANALYSIS 6

2.1 Industry Classification 62.2 Success in the Industry would depend on the

following factors

2.3 Profiles of Key Consumer Durable players 72.4

Opportunities and Challenges 10

3 CONSUMERANALYSIS 11

3.1 Consumer Classes 113.2 Changing Attitude ofTodays Customers 123.3 Marketers Response to Consumer Attitude 134 MARKETANALYSIS 14

4.1 Consumer Electronics 144.2 Household Appliances 15

5 PRODUCTANALYSIS 16

5.1 Television 165.2 Consumer Electronics Market in IndiaCTV 18

5.3 CTV Industry Post Liberalisation 186 COMPETITIONANALYSIS 20

6.1 Competition Overview 206.2 India as an Emerging Force in Television Market 226.3 Market Measurement and Forecasting 237 THEROADAHEAD 258 CONCLUSION 26

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1.OVERVIEW

India in its 62 years of journey has seen manifold increase in the income of its

denizens (Rs. 38,084 as on 2009) and this has led to paradigm shift in the

purchasing behaviour of the people here.

There is a discernible shift in the consumers preference in favour of higher end,

technologically superior branded products, the demand being spurred by

increasing consumer awareness and preference for new models. This shift is

also because of the increase in manufacture of branded products and narrowing

down of price between branded and non-branded goods. Competition has forced

the companies to offer efficient after sales service and support and this, in turn,

has swayed customer preference for branded products. Post liberalisation there

has been inundation of goods transcending the borders and the customer has a

wider choice; breaking the shackles of the consumers regarding limitations of

choices. Indian consumer durables market used to be dominated by a few

domestic players like Godrej, Allwyn, Kelvinator, and Voltas. But post-

liberalization many foreign companies have entered into India, dethroning the

Indian players and dominating the market. The major categories in the marketare CTVs, refrigerators, air-conditioners and washing machines. The rural marketis growing faster than the urban markets, although the penetration level in rural

area is much lower. The CTV segment is expected to be the largest contributing

segment to the overall growth of the industry. The rising income levels, double-

income families and increasing consumer awareness are the main growth

drivers of this industry. In addition to them the young nature of population and

easy finance options are also fuelling the market and its dynamics. Consumers

today are more indulgent in market place than their predecessors. There has

been shift in the definition of needs and wants. For example a mobile phone is

more of a need today then a want. Westernisation has influenced the psyche of

the Indian customers to a degree. This report is an attempt to reflect the

changes in the consumer buying behaviour in the Indian Market especially in

home appliances buying.

1.1 KEY GROWTH DRIVERS FOR CONSUMER DURABLES

Riseindisposable income: The demand for consumer electronics has been

rising with the increase in disposable income coupled with more and more

consumers falling under the double income families. The growing Indian middle

class is an attraction for companies who are out there to woo them.


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Availability ofnewer variants ofa 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 offinancing 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 inthe share of organized retail: Rise in organized 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), organized 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 andbrand 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.

1.2 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 fromglobal ones who have technologically advanced products to offer.

Rivalryand 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.

Potentialmarkets remainingyet untapped: A large segment of the

domestic market, mostly the rural market is yet to be tapped. Tapping this yet


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untapped and unorganised market is a major challenge for the Indian consumer

durables sector.

Threatfrom 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 viewershipfrom TV to a large extent. With the advent of a horde of FM radio stations, radio

sets have now substituted TVs.

Customer power withrespect 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.

2.INDUSTRY ANALYSIS

2.1 INDUSTRY CLASSIFICATIONTHE INDIAN CONSUMER DURABLES INDUSTRY CAN BE SEGMENTED INTO THREE

KEY GROUPS

CONSUMER DURABLES

WHITE GOODS KITCHEN

APPLIANCES/BROWN

GOODS

CONSUMER

ELECTRONICS

Refrigerators

Washing machinesAir conditionersSpeakers and audio

equipment

Mixers

GrindersMicrowave ovenIronsElectric fansCooking rangeChimneys

Mobile phones

TelevisionsMP3 playersDVD playersVCD players


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ATTRACTIVE AREAS FOR INVESTMENT

High-end colour TVsHigh-end, flat screen TVs, plasma display panels and liquid crystal display TVsregistered an average of more than 100 percent growth in 200708 and thetrend is expected to continue

Split air conditioners Split air conditioners have been growing much faster than window airconditioners, growing at 97 percent in 200607 compared to 32 percent growth

for window air conditioners.

Distribution and retailWith the rural and semi-urban markets opening up avenues for expansion, theneed to have a strong distribution network is crucial for companies to remain

price competitive

Mobile phones The mobile phone market grew at 29 percent in 200708 over the previousyear. The market is expected to grow at a compound annual growth rate (CAGR)

of about 28.3 percent from 2006 to 2011

2.2 SUCCESS IN THE INDUSTRY WOULD DEPEND ONADDRESSING KEY FACTORS

Market positioning and branding Product technology

Addressing key customer requirements

that act as demand drivers by

proactive

marketing and establishing strong

brand

association

Providing technologies that benefit the

customer through low power

consumption, low service requirement,

low cost of operation, etc.


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Distribution and service network Attractive locations

From saturated urban regions to low-

penetration rural areas and tier-II/III

towns, distribution networks and brand

recognition will continue to play

significant roles

With raw materials forming a significantchunk of costs, production facilities

located near ports to import cheaper

raw

materials could provide an advantage

2.3 PROFILES OF KEY INDIAN CONSUMER DURABLES

PLAYERS (key players and their product)

COMPANY PRODUCTS

VIDEOCON

INDUSTRIES

REFRIGERATOR,WASHING MACHINES,T.V.,A.C, MICRO

WAVE

GODREJ REFRIGERATOR, AIR CONDITIONER

WHIRLPOOL OF

INDIA

REFRIGERATOR, WASHING MACHINES

MIRC

ELECTRONICS

TELEVISION

PANASONIC TELEVISION

VOLTAS REFRIGERATOR, WASHING MACHINES

BPL LIMITED REFRIGERATOR, TELEVISION

ELECTROLUX VACCUM CLEANER, REFRIGERATOR

SAMSUNG VACCUM CLANER, REFRIGERATOR, T.V, MOBILE PHONES

HOOVER VACCUM CLEANER

LG ELECTRONICS WASHING MACHINES,REFRIGERATOR.T.V.,MOBILE

PHONES

EUREKA FORBES VACCUM CLEANER

SONY TELEVISION, MOBILE PHONES, DVD PLAYER


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BLUESTAR AIR CONDITIONER

BAJAJ ELECTRONICS GEYSERS, ELECTRIC FANS

NOKIA MOBILE PHONES


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BLUESTAR

Bluestar is the largest central air conditioning company with anetwork of 23 offices, four

Modern manufacturing facilities and around 2,000 employees.

It has established its leadership in the field of commercialrefrigeration equipment ranging

From water coolers to cold storages.

The company plans to increase production capacity by setting up anew manufacturing plant at

Thane and is also looking to enhance its product range, which

comprises developing special

Purpose products and comfort applications.

Bluestar is the largest central air conditioning company with anetwork of 23 offices, four

modern manufacturing facilities and around 2,000 employees

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 Harbour, Michigan, USA with a global

presence in over 170 countries and manufacturing

operation in 13 countries with 11 major brand names such as

Whirlpool, Kitchen Aid,

Roper, Estate, Bauknecht, Laden and Agnes. 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

The company offers engineering solutions in areas such as heating,ventilation and air-conditioning, refrigeration, electro-mechanical

projects, textile machinery, machine tools, mining and construction

equipment, materials handling, water management, building


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A survey carried out by FICCI last year indicated that the consumer durable

goods sector is all set to witness 12 percent growth this year. Spurred by a

marked shift in consumers preference for high-end products from premium

brands floating superior technology. Clearly, the aspiration to own premiumlifestyle products among consumers has gone up.

The rural Indian market, which accounts for nearly 70 percent of the total

number of households, witnessed a 25 percent annual growth while the urban

consumer durables market reflected an annual rate of 7 to 10 percent. CE

companies are re-working their strategies for the ensuing summer season,

considered to be a good period for the industry. A cut in customs duty on inputs

will enhance the manufacturing competitiveness of the industry by reducing costand boosting demand and sales.

Rationalization of taxes, clearly, seems to be a universal demand across the CE

sector. This will ensure manufacturers in India have a level playing field as

against their counterparts in the import business. Fast growing productsegments such as flat panel TVs, LCD TVs, Plasma TVS, Slim CRT TVs, frost-free

refrigerators, fully automatic washing machines, split air-conditioners, DVD

players, microwave ovens, home theatre systems products entailing high

aspiration value are likely to see a growth in consumption. The consumer

durables sector is set to close the current financial year with 12% growth, 0.5

percentages point more than the growth registered last fiscal, according to a

Ficci survey. The survey is based on feedback from the consumer durables

industry, allied industry organisations and government agencies. Technological

improvements, falling prices due to competition, aggressive and innovative

marketing and declining import tariffs have contributed to the strong growth.

According to the survey, many high-end products such as LCD TV, MP3, DVD,

split air-conditioner, high end washing machine do not find place in the list of

items covered by the Central Statistical Organisation (CSO) for calculating

official data. These items, however, have seen impressive growth. The sectors

which are projected to achieve excellent growth rates of more than 20% in

terms of units manufactured are air-conditioner (25%), split air-conditioner

(60%), frost-free refrigerator (54%), washing machines (20 %), fully-automatic

washing machine (35 %), microwave oven (35 %), high-end flat panel TV (100

%) and DVD (25 %). The sectors which are expected to record high growth rates

between 10% and 20 % are refrigerator (11 %) and colour TV (15 %).

India has an increasingly affluent middle class population that, on the back of

rapid economic growth, has made the countrys consumer electronics industry

highly dynamic. The industry has been witnessing significant growth in recentyears due to several factors, such as retail boom, growing disposable income

and availability of easy finance schemes. But still, the consumer electronics


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goods, like refrigerators, microwave and washing machines have low

penetration in the country, representing vast room for future growth.

Propelled by growing middle class population, changing lifestyle and rapidurbanization, the Indian consumer electronics industry is forecasted to

grow at a rapid rate of 10% to 12% in the coming few years.

Volume sales of washing machine will be driven by growth in fullyautomatic category during 2008-09 to 2011-12.

The market for televisions in India is changing rapidly from theconventional CRT technology to Flat Panel Display Televisions (FPTV).

Currently, the split between CRT and FPTV is around 97% and 3%

respectively, and the share of FPTV is projected to increase at robust rate

in near future.

Frost-free refrigerator sales, certainly growing at a much faster pace thanthe direct-cool category, are anticipated to drive the Indian refrigerators

market over the forecast period.

The AC market in India is projected to grow at 30% to 35% for the comingfew years.

Driven by young population, demand for MP3 players and digital videoappliances are anticipated to surge at double-digit rate in near future.

The low penetration level of consumer electronics goods coupled withincreasing preference for comfort and luxurious goods are widelyattracting the foreign as well as domestic players to the industry.

2.4 OPPORTUNITIES AND CHALLENGES

THE CHALLENGES

Heavy taxation in the country is one 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.

About 65 per cent of Indian population 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 black and white TVs and doesn't know

what flat screens are.

Also, foraying into these rural markets has a considerable cost componentattached to it. Companies not only have to set up the basic infrastructure in

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terms of office space, manpower, but also spend on transportation for moving

inventory. Even LG and Samsung, which are touted as having the largestdistribution 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.

Poor infrastructure is another reason that seems to have held back the industry.

Regular power supply is imperative for any consumer electronics product. Butthat remains a major hiccup in India.

THE OPPORTUNITIES

The rising rate of growth of GDP, rising purchasing power of people with higher

propensity to consume with preference for sophisticated brands would provide

constant impetus to growth of white goods industry segment.

Penetration of consumer durables would be deeper in rural India if banks and

financial 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.

While the consumer durables market is facing a slowdown due to saturation in

the urban 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.

Currently, rural consumers purchase their durables 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 forbuying, should be converted to routine regular

feature from the seasonal character. Rural India that accounts for nearly 70% of

the total number of households, has a 2% penetration in case of refrigerators

and 0.5% for washing machines, offers plenty of scope and opportunities for the

white goods industry.

The urban consumer durable market for products including TV is growing

annually by 7 to 10 % whereas the rural market is zooming ahead at around 25

% annually. According to survey made by industry, the rural market is growing

faster than the urban India now. The urban market is a replacement and up

gradation market now. The increasing popularity of easily available consumer

loans and the expansion of hire purchase schemes will give a moral boost to the

price-sensitive consumers. The attractive schemes of financial institutions and

commercial banks are increasingly becoming suitable for the consumer.

Consumer goods companies are themselves coming out with attractive financing

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schemes to consumers through their extensive dealer network. This has a directbearing on future demand.

1.CONSUMER ANALYSIS

3.1 CONSUMER CLASSES

Even discounting the purchase power parity factor, income classifications do notserve as an effective indicator of ownership and consumption trends in theeconomy. Accordingly, the National Council for Applied Economic Research(NCAER), Indias premier economic research institution, has released analternative classification system based on consumption indicators, which is morerelevant for ascertaining consumption patterns of various classes of goods.

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

the highly affluent, i.e. starting with the destitute, the aspirant, theclimber, the consuming class and the rich, which differ considerably in theirconsumption behaviour and ownership patterns across various categories ofgoods. These classes exist in urban as well as rural households both, andconsumption trends may differ significantly between similar income householdsin urban and rural areas.

Consumer spending

For long, the consumer has been the poster-boy of the India growth story. Thedemographic shift in favour of a younger working population and the upward-bound income levels have been cited to support the view that, no matter whatgoes wrong with the global economy, the Indian consumer will continue tosplurge. But this assumption is now being challenged, with the prospect of paycuts and even layoffs beginning to materialise. Is the slowdown taking a toll onthe Indian consumer?

CONSUMER DURABLES: NO SLOWDOWN YET

Sales of consumer durables do not yet show signs of a dramatic slowdown.Overall production for categories such as washing machines, refrigerators andtelevisions grew 7 per cent in 2008, based on numbers captured in the Index ofIndustrial Production. Month-on-month production numbers this financial year,however, are erratic.

Taking published production figures of consumer durables as a sales indicator,categories such as television sets and washing machines recorded better growthin the previous two quarters, while air-conditioners suffered sharp declines.

However, IIP numbers may not fully represent ground reality, as sales of high-end consumer electronics such as mobile handsets and LCD televisions, keydrivers of durables sales in recent years, are not captured here. Helped byhealthy replacement demand and price-cuts, manufacturers such as Samsungand LG have seen a sharp increase in LCD TV sales in 2008. Samsung reported adoubling of its Indian LCD TV sales in 2008, even as the television segmentoverall notched up a 15.8 per cent growth. Future growth may, however, hinge

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on the availability of consumer finance, with about 15-20 per cent of totaldurables sales relying on finance.

3.2 CHANGING ATTITUDES OF TODAYSCUSTOMERS

Today customer likes to indulge in buying spree. No more the customers buy

only to fulfil their basic needs and emphasise on savings itself. Indianconsumers have become value sensitive and are not much price sensitive as

was the case earlier. If they feel that a particular product offers them more value

and its price is high, even then they are willing to buy the product. The Indian

consumers strictly follow their culture, tradition and values, as a result of which

foreign companies were forced to give an Indian touch to them in order to

succeed in India. McDonalds, MTV, Pepsi, Star TV, Coca Cola India and many

more had to Indianise themselves to flourish in India. Karva Chauth is celebrated

with more zeal and enthusiasm than the Valentine Day. The Indian consumer of

today gives preference to features of a product rather than its brand name. The

trend that higher segment consumers only buy the top brands has also come toan end. Even after liberalization Indian companies and brands are doing very

well. It is clearly evident from the fact that despite many foreign brands being

sold in India, Raymond is still Indias largest textile company and Haldiram is

doing well despite the presence of McDonalds and Pizza Hut.

The consumers today are not confined to a single brand and prefer change

rather than sticking to the same brand. Not often do we see any home with cars

of the same brand or household products of the same brand. The use of creditcard for shopping is a new emerging trend in India. Also consumers are availing

credit or loan from banks and other financial institutions to fulfil their needs and

wants.

The Indian consumers are spending thick and fast on premium and luxury

products. The Indian consumers have shown another major change in their

buying behaviour.

They just dont want availability of products; they also want better experience,

services and ambience. This has led to the growth of shopping malls where

shopping, entertainment and better facilities are all available under one roof. To

a great extent the presence of heavy weight such as the pantaloons, big bazaar,

croma, nilgiris etc has given a huge fillip to the growing market by not only

selling products but also the experience. The Indian consumers are much more

inclined to the organized sector. The rural Indian consumers are also showing

signs of change. They have all the modern amenities at their home and their

standard of living is fast improving. The rural households have earned huge

money due to price rise in real estate. They are also shifting towards industrial

and services sector; hence their purchasing power is increasing. It is reflected in

their living standard and possession of all electronic gadgets and luxury cars.

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There is a stiff competition in the Indian market today and it has become a

buyers market from sellers market. Customers are the ultimate beneficiary of

the fierce competition in the market. Competition has reduced prices to a greatextent and has forced the manufacturer to maintain product quality to sustain in

the highly competitive market.

Though in a small way internet and telemarketing have also caught the

attention of the Indian customers. Dell, Amazon .com, etc have carved a good

niche for them in the sector. The consumers today do not mind availing creditas when needed. So credit availability has become a key factor for

determination of a buying a good. Consumers are also availing the information

available on net through various forums and websites.

3.3 MARKETERS REPONSE TO CONSUMER ATTITUDE

With change in consumer buying behaviour the companies also made necessary

changes in their marketing strategies. The changes include:

1) Launching of premium products by companies to fulfil requirements of high

class consumers.

2) Since purchasing power of rural India has increased, the companies have

started shifting their focus towards rural India to capture untapped rural market.

This has reaped huge benefits for companies like in cases of PepsiCo, Coca Cola

India and other FMCG companies.

3) Companies not only aim to sell their products but also aim to provide better

after sales services to its consumers. For example companies have provisions to

send their technicians to repair the cars struck at highways or other outer

locations due to technical failure or in case of a mishap. This improves the

companys credibility and helps to build its customer base.

4) Companies design their products on the basis of market segmentation so thatthey have products to suit every pocket and requirement.

5) Due to sharp growth in the communication sector, companies are providing

many schemes and plans to attract customers. For example mobile service

providers provide lifetime option and free calls to other mobile users under aspecific plan of the company.

6) Due to fierce competition in the electronics market and peoples willingness

to purchase hi-tech products the rates of LCD and plasma TVs have been

slashed by 25%-30%. Through this strategy electronic companies received very

good response from the consumers in the recent past and were able to build a

considerable market for their products.

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7) Indian consumers have developed a liking for foreign tours and holidays. This

has led to development of many travel agencies that provide a planned foreign

tour at a reasonable price. What is even more interesting is that the customer

does not have to pay the amount in lump sum; instead, he has the facility to

make the payment in monthly instalments according to his convenience.

8) Consumers of India have developed a tendency to save travel time. For such

consumers low fare or low cost carriers are available that provide air travel

facility at a very affordable price.

9) Consumers of India want better housing facilities. The construction companies

are fulfilling this requirement of consumers by providing them luxurious houses,

exquisite interiors, round the clock water and electricity supply, full time

security, club house, gymnasium, etc. within the premises.

10) Indian consumers are increasingly becoming aware of the importance of

health and hygiene. Hence companies are making products to suit their health

like low calorie, low fat food. As far as hygiene is concerned companies have

fully mechanized their plants to maintain hygiene and pack the food in such a

way that it remains fresh for longer period of time and does not lose its nutritive

value before consumption.

11) The need for internet is fast growing. To fulfil this need of consumers, mobile

manufacturing companies are providing internet access facility on mobile

phones. This has revolutionized the communication sector and provided a

means of communication that was never ever in anybodys dreams till a few

years back.

12) Indian consumers liking for credit is also increasing rapidly. Hence many

financial institutions have come into existence in India and are flourishing. Banks

have also become liberal in their loan and credit policies.

2. MARKET ANALYSIS

For the purpose of doing the market analysis the whole consumer durablesmarket has been divided into two parts i.e.; Consumer electronics and

Household appliances.

Now analysis has taken into account the market value, market value forecast,market volume, and market volume forecast.

4.1 CONSUMER ELECTRONICS

The consumer electronics market consists of the total revenues generatedthrough the sale of audio visual equipment and games console productsdesigned primarily for domestic use. The audio visual equipment includes CDPlayers, DVD Players / Recorders, hi-fi systems, home theatre, in-carentertainment systems, portable digital audio, radios, televisions and video

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recorders. Games consoles segment includes both home use and portableconsoles. After posting decelerating growth between 2004-2008, the Indianconsumer electronics market is expected to follow similar pattern in theforthcoming years up to 2013.

The Indian consumer electronics market generated total revenues of $4,196.6

million in 2008, representing a compound annual growth rate (CAGR) of 9.5% forthe period spanning 2004-2008. In comparison, the Chinese and Japanesemarkets grew with CAGRs of 13.4% and 6% respectively, over the same period,to reach respective values of $26,077.9 million and $22,492.5 million in 2008.Electricals and Electronics Retailers sales proved the most lucrative for theIndian consumer electronics market in 2008, generating total revenues of$3,821.7 million, equivalent to 91.1% of the market's overall value. Incomparison, sales from Discount, Variety Store, and General MerchandiseRetailers generated revenues of $302 million in 2008, equating to 7.2% of themarket's aggregate revenues. The performance of the market is forecast todecelerate, with an anticipated CAGR of 6.4% for the five-year period 2008-2013, which is expected to drive the market to a value of $5,727.7 million by theend of 2013. Comparatively, the Chinese and Japanese markets will grow withCAGRs of 5.7% and 1.2% respectively, over the same period, to reach respectivevalues of $34,433.6 million and $23,822.4 million in 2013.

MARKET VALUE

The Indian consumer electronics market grew by 7.7% in 2008 to reach a valueof $4.2 billion. The compound annual growth rate of the market in the period2004-2008 was 9.5%.Electricals and electronics retailers sales proved the mostlucrative for the Indian consumer electronics market in 2008, generating 91.1%of the market's overall revenues. Sales from discount, variety store, and generalmerchandise retailers generated 7.2% of the market's aggregate revenues.

MARKET VALUE FORECASTIn 2013, the Indian consumer electronics market is forecast to have a value of$5.7 billion, an increase of 36.5% since 2008. The compound annual growth rateof the market in the period 2008-2013 is predicted to be 6.4%.

4.2 HOUSEHOLD APPLIANCES

The household appliances market reflects the sale of six product sectors:refrigeration appliances (including fridges, freezers and fridge freezers), cookingappliances (including cookers, microwaves, ovens, cooker hoods, foodprocessors and toasters), washing appliances (including washing machines,clothes dryers and washer-dryers), room comfort and water heater appliances

(which include air conditioning, circulating and ventilation fans, space heatersand water heaters), vacuum cleaners, and dishwashers. The market value hasbeen calculated using manufacturer selling prices. The performance of themarket is forecast to decelerate, with an anticipated CAGR of 10% for the five-year period 2008-2013, which is expected to drive the market to a value of $7.7billion by the end of 2013.The Indian household appliances market has grown ata strong rate in recent years. Further strong growth is expected for the forecastperiod.

The Indian household appliances market generated total revenues of $4.8 billionin 2008, representing a compound annual growth rate (CAGR) of 12.5% for theperiod spanning 2004-2008. In comparison, the Japanese and Chinese markets

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grew with CAGRs of 1.1% and 7.5%, respectively, over the same period, to reachrespective values of $18.6 billion and $24.4 billion in 2008.

Market consumption volumes increased with a CAGR of 13.2% between 2004-2008, to reach a total of 34.7 million units in 2008. The market's volume isexpected to rise to 52.2 million units by the end of 2013, representing a CAGR of

10% for the 2008-2013 periods. Refrigeration appliance sales proved the mostlucrative for the Indian household appliances market in 2008, generating totalrevenues of $1,445.3 million, equivalent to 30% of the market's overall value. Incomparison, sales of cooking appliances generated revenues of $1,405 million in2008, equating to 29.1% of the market's aggregate revenues.

The performance of the market is forecast to decelerate, with an anticipatedCAGR of 10% for the five-year period 2008-2013, which is expected to drive themarket to a value of $7.7 billion by the end of 2013. Comparatively, theJapanese and Chinese markets will grow with CAGRs of 0.4% and 4.7%,respectively, over the same period, to reach respective values of $18.9 billionand $30.7 billion in 2013.

MARKET VALUE

The Indian household appliances market grew by 9.4% in 2008 to reach a valueof $4.8 billion. The compound annual growth rate of the market in the period2004-2008 was 12.5%.

MARKET VOLUME

The Indian household appliances market grew by 11.8% in 2008 to reach avolume of 34.7 million units. The compound annual growth rate of the marketvolume in the period 2004-2008 was 13.2%.Refrigeration appliance sales provedthe most lucrative for the Indian household appliances market, generating 30%of the total revenues. In comparison, cooking appliance sales account for a

further 29.1% of the market's revenue.MARKET VALUE FORECAST

In 2013, the Indian household appliances market is forecast to have a value of$7.7 billion, an increase of 60.7% since 2008. The compound annual growth rateof the market in the period 2008-2013 is predicted to be 10%.

MARKET VOLUME FORECAST

In 2013, the Indian household appliances market is forecast to have a volume of52.2 million units, an increase of 50.4% since 2008. The compound annualgrowth rate of the market volume in the period 2008-2013 is predicted to be8.5%.

3. PRODUCT ANALYSIS

5.1 TELEVISION

INTRODUCTION

In the last five years colour television industry (CTV) has witnesseddrastic changes in the intensity of competition. Exchange schemes, freegifts, price offs, prizes, deferred payment schemes and other incentives aspromotional tools have been deployed by the players, which certainly have

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made the market, vibrant and pulsating. A major factor contributing to thegrowth has been availability of consumer financing schemes. Concomitantly theindustry has been witnessing a new scenario with a new market profile. Theentrenched position of the Indian market leaders in CTVs like Videocon, BPL andOnida has been challenged by MNCs such as LG, Samsung, Sony, Philips, AIWA,

Akai, Panasonic, Sansui and Sharp; some in a perceptible way, othersthreatening to do so. The industry is going through turbulent transformation.Companies are relooking at their strategies and are desperate for growth. Sincethis is a technology driven industry, companies need to constantly improvise,innovate and customise their products. Coloured cabinets, headphones, 3-D 360degree sound technology and e-mail TV, plasma TV and golden eye technologyare just a few examples. The last few years have seen a quantitative andqualitative change in TV technology and software. With the advent of severallocal and foreign satellite channels, demand for CTVs has seen a rise. In fact, thetelevision manufacturing industry has come a long way since the big black andwhite TV sets to the modern day ultra-thin Plasma and LCD TV sets. Withthe ever changing technology the Television industry has adapted itself suitably

to cater to the changing tastes of the consumer. Although the top players viz.LG, Sony, Videocon, Phillips, Samsung and Onida have drastically reducedprices, they have gained more volume due to increasing market size andhigher penetration levels, coupled with conscious shift towards flat colourtelevisions. Aggressive and innovative marketing strategies and technologicaladvances have led to strong brand differentiation and prices. In theprocess the industry has evolved with products available at different pricepoints at all levels. This process was also facilitated by growth in production inthe organised segment and domestic availability of multinational brandsdue to lowering of import duties and other liberal measures. The televisionindustry appears to have two clearly differentiated segments. The MNCs havean edge over their Indian counterparts in terms of technology, aggressivemarketing strategy, economies of scale in branding through international eventsand associations combined with a steady flow of capital.

INDUSTRY ANALYSIS- 5 FORCES MODEL

Michael Porters Five Forces Model provides a robust and time-tested frameworkfor analysing any industry, reflected in the strength of the five forces (industrycompetitors, potential entrants, and threat of substitutes, power of buyers andpower of suppliers). The collective strength of the five forces determines theultimate profit potential in an industry, where profit is measured in terms of longterm returns on capital invested (Porter, 1980). The elements of each of theabove forces and the extent and /or effect of each element in the context of thetelevision industry have been analysed and enumerated below.

THREAT OF NEW ENTRANTS

Most current players are global playersNew entrants will need to invest in brand, technology, distributionCUSTOMER POWER

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SUPPLIER POWER

Indigenous supply base limited most raw materials are importedCOMPETITIVE RIVALRY

Number of well-established players; several new players enteringGood technological capabilityMany untapped potential marketsTHREAT OF SUBSTITUTES

Unbranded products and cheaper imports could enter the marketOverall, the sector is a dynamic one, with significant growth opportunities.

5.2 CONSUMER ELECTRONICS MARKET IN INDIA:COLOUR TELEVISION

The consumer electronics market is one of the largest segments in theelectronics industry in India. Catering to a population of more than 100 crorespeople, the consumer electronics industry in India is poised for strong growth inthe years to come. It is predicted that the Indian audio/video consumerelectronics industry will grow to Rs.26,931.13 crores ($6.59 billion) by 2011,rising at a Compound Annual Growth Rate (CAGR) of 10.0 per cent fromRs.18,390 crores ($4.5 billion) in 2007.The growth will be aided by a multitude of

factors, including:

Growing consumer confidence due to rising disposable incomes;

Easy financing schemes that are making purchases possible;

Increased local manufacturing;

Expanding distribution networks;

Sporting events, such as the Cricket World Cup.

Television continues to be the mainstay of the consumer electronicsindustry in India with the transition slowly occurring to newer technologies suchas LCD and PDP. The history of the Indian television industry dates back to 1982,

the year when India hosted the Asian Games. There was a huge demand forcolour televisions all through the 80s. In 1984-1985, the colour televisionindustry was growing at an astounding rate of 140.3%. However, in 1985-86, it fell to 68.6%, 15% in 1988-89 and finally in the year 1989-90 it touched arock bottom level of 5%. In 1991-92, the Indian economy was goingthrough a balance of payment crisis. As a result of this, for the first time in thehistory of Indian colour television, one saw a deceleration in the sales of colourtelevisions at -14.5%. During this period, the prices of colour televisionsskyrocketed due to the high import duties imposed on colour picture tubes.

5.3 THE COLOUR TV INDUSTRY POST LIBERALISATION:

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The Colour TV industry in India has seen a gamut of changes inthe past one decade as liberalization set in the Indian subcontinent making itsmarket highly competitive and consumer driven. With the fast changingliberalization policies, changing and growing demands of the consumersmade the industry competitive. The constant desire of the companies

(domestic or international) to have a major share in the market often leadsthem to die many deaths which has became a hackneyed phenomenon in thissector of Liberalized India if the companies are not in able to cope with changingreforms and the changing tastes and preferences of the consumers.

The foreign player entered the Indian market since the Indian economyincreasingly interdependent almost over the last one and half decades.Consumers in India with open markets on an average are enjoying lowerprices, improved consumption, improved savings and rising standards of living.Before liberalization in India, the consumer was at the mercy of the producerand savings management were prevailing in the sense that individuals savedand then consumed. This might be because of no financing facilities, no creditcard facilities and moreover demand side economic were prevailing. Afterliberalization the total scenario has changed- consumers in India movedfrom savings management to expenditure management. This is because ofthe availability of goods and services at lower price, availability of creditcards, availability of finance at low interest and in some cases zero interest andmoreover the death of power of monopoly in many sectors because of the entryof the foreign players. Producers have become price takers rather than pricesetters. The tastes and preferences, life style and consumption patterns ofthe consumers have also changed. Like other third world countries, peoplein India have started spending much more money on eating out; startedbuying a flat or a car because of the availability of credit cards and easyfinancing facilities; more number of people have been travelling abroad after

liberalization and there has been a distinct shift from joint family system to thatof nuclear families. As per the estimates of the confederation of Indian Industry(CII) the Indian consumer durable industry is Rs 20,000 crores business industry.The industry is highly dominated by the foreign players occupying the top slotsin the market shares. From a recent data obtained from the Equitymaster.comthe market share of all the MNCs in the colour TV segment is about 65%. Thebiggest attraction for these players is the growing Indian middle class, which isapproximately 250 million, and also low penetration levels characterize thismarket. Most of the segments in this sector are characterized by intensecompetition, emergence of new companies (especially MNCs), introduction ofstate-of-the-art models, price discounts and exchange schemes. There is asignificant shift today. 15-20 years ago, it was a Seller's market. Customers had

to buy what was available. There was absolutely no choice. But today, it isentirely different. It is a Buyer's market. There is plenty of choice, both in termsof brands and the items. It has helped in widening the product base of consumerdurables. Also, technological changes have helped the boom in the industry. TVsets are still the fastest growing category among household durables. During thelast two years 11.5% of Indian homes bought a TV set. This figure is even higheramong the top eight metros at 21.3% about one in every five home in thesecities acquired a TV set in the last two years.

As a result of which the entrenched position of the Indian market leadersin CTVs like Videocon, BPL and Onida has been challenged by the MNCs

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such as LG, AIWA, Akai, Panasonic, Samsung, Sony, Philips and Sharp; some ina perceptible way and others threatening to do so. Some of the growth driversbecause of which CTV market is growing fast are:

Increased awareness Increase in disposable income Emergence of nuclearfamilies Rising availability Declining prices Many MNC and domesticcompanies are now making India as a manufacturing centre because: Low costskilled labour Tax free zones i.e. SEZs Qualified workforce Untappeddomestic market Excellent supply base for glass and colour picture tubes.

Some economic measures that have also played a role in this phenomenal

growth are:

Custom duty on colour picture tubes (CPTs) lowered to 20% from 25%

Abatement rates on TV sets have changed from 35% to 40%

Special additional duty on customs of 4% was done away with

Single rate of excise duty at 16%

4. COMPETITION ANALYSIS

6.1 COMPETITION OVERVIEW

Samsung India (CURRENTMARKETSHARE-37%)

Initially the strategy of Samsung in India was to create premium image by

emphasising global brand. After facing stiff competition from another Korean

major- LG, Samsung also started playing price game. In 2004 it reverted back to

its premium positioning, although it resulted in some loss of market share. In

line with the Global Digital Initiative of the Parent Company, Samsung India

acquired digital leadership in India by introducing its digital ready televisions like

the 40" LCD Projection TV, 43"Projection TV and the Plano series of Flat Colour

televisions.

LG India (CURRENT MARKET SHARE-23%)

LG Electronics rightly understood the consumer motivations to create magnetic

products, price them strategically, position them sharply and keep making the

magnetism more potent. Having understood the finer differences in consumer

motivations, it opted for sharp-arrow reasons-to-buy differentiation over the

blanket-all approach taken by most of the other players. It is an aggressive

marketer. It focuses on low and medium price products.

Toshiba India

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Toshiba India Private Limited (TIPL) is the wholly owned subsidiary of Japanese

Electronics giant Toshiba Corporation and was incorporated in India on

September 2001. Toshiba had a presence in India since 1985 and was

represented in India through their Liaison Office.

Sony India (CURRENTMARKETSHARE-21-22%)

Sony Corporation, Japan, established its India operations in November 1994. In

India, Sony has its distribution network comprising of over 7000 channel

partners, 215 Sony World and Sony Exclusive outlets and 21 direct branch

locations. The company also has presence across the country with 21 company

owned and 172 authorized service centres.

Sharp India Ltd

Sharp India ltd was incorporated in 1985 as Kalyani Telecommunications and

Electronics Pvt Ltd, the company was converted into a public limited company inthe same year. The name was changed to Kalyani Sharp India in 1986. The

company was entered into a joint venture with Sharp Corporation, Japan - a

leading manufacturer of consumer electronic products to manufacture

VCRs/VCPs/VTDMs. The company manufactures consumer electronic goods such

as TVs, VCRs, VCPs and audio products. The products were sold under the

Optonica brand name. Sharp has a production base in 26 countries with 33

plants, and its products are used in 133 countries. The company was accredited

with the ISO-9001 certification in the month of February, 2001.

Hitachi India

Hitachi India Ltd (HIL) was established in June 1998 and engaged in marketing

and sells a wide range of products ranging from Power and Industrial Systems,

Industrial \Components & Equipment, Air Conditioning & Refrigeration

Equipment to International Procurement of software, materials and components.

Some of HILs product range includes Semiconductors and Display Components.

It also supports the sale of Plasma TVs, LCD TVs, LCD Projectors, Smart Boards

and DVD Camcorders.

Mirc Electronics (ONIDA)

The company commands strong brand equity among consumers largely owingto the success of its Onida brand.

High-quality designs have made the company a leading player in theelectronics and entertainment business. Its popular devil ad although had

engendered a strong emotional pull towards the brand, technologically itrepresented no advancement. The company plugged the gap by touting its

digital technology. Like Videocon, it has also been able to hold its market share.

The world-class quality of Onida has enabled the company to make a

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breakthrough on the export front. Onida is a leading brand in Gulf market and

also exports its models to Africa, Bangladesh, Sri Lanka and Nepal. It has

technical tie-up with the Japan Victor Company, better known as JVC. So focused

is Onida on positioning itself on the premium, high-tech plank that it is even

planning to push its own envelope on obsolescence, much like Intel has been

doing in its own industry. The strategy is aimed at further broad basing the

product offering of the company, which has largely dominated the top-end of the

television market, across multiple market segments. Besides understanding the

strategy adopted by different players, several other factors- industry growth,

concentration and balance, corporate stakes, fixed cost, and product differences

need to be analysed to determine the extent of rivalry between the existing

players.

Videocon (CURRENT MARKET SHARE-12%)

It is the market leader in the consumer electronics and home appliancessegments in India; the company manufactures home appliances such as

refrigerators, microwave ovens, compressors, air conditioners and washing

machines.

It has plans to acquire Daewoos consumer electronics businesses worldwideto bring LCD TVs, plasma TVs and components into its fold; the move would also

help it acquire a consuming partner for the recently-acquired Thomsons picture

tube business. Videocon has always been a price player and has an image of a

low price brand. This entails providing more features at a given price vis--vis

competitors. It has taken over multinational brands to cater to un served

segments, like Sansui- to flank the flagship brand Videocon in the low to midpriced segment, essentially to fight against brands like BPL, Philips, Onida and

taken over Akai- tail end brand or brands like Aiwa. Videocon is one of the

largest manufacturers of television and its components in India and thus has

advantages of economies of scale and low cost due to indigenisation. It has the

widest distribution network in India with more than 5000 dealers in the major

cities .It also has a strong base in the semi-urban and rural markets. Due to its

multi-brand strategy, it has at present multiple brands at the same price point.

This has led to a state of diffused positioning for its brands. It has also led to a

cannibalisation of sales among these brands. The flagship brand Videocon has

lost market share due to the presence of Sansui in the same segment. Becauseof reduction in import duties on CPT the cost advantage of Videocon is also on

the decline. Hence it is facing rough weather and also trying to boost exports.

Panasonic India (CURRENTMARKET SHARE-6%)

Panasonic Corporation based in Osaka, Japan is a worldwide leader in thedevelopment and manufacture of electronic products for a wide range ofconsumer, business, and industrial needs. Panasonic Electric Works Co., Ltd.traces its roots to the company started in 1918 by Konosuke Matsushita.

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Panasonic India plans to invest USD 100 million in its new plasma TV productionfacility in 2011.The company currently has five production units in the country, at Noida,Gurgaon, Vadodara, Chennai and Delhi. It also launched the worlds slimmest, 1-inch plasma TV called Vierra PDP Z1.According to Panasonic The marketpotential for plasma TV was much greater in India than China, the demand forsuch high-end sets was increasing at a rate of 4-10 per cent in the country. Thecompany has priced its plasma TV between Rs 24,000 and Rs 30 lakh (for a 103- inch screen). It has already sold ten such units this month.

6.2 INDIA EMERGING AS A FORCE IN THE TELEVISION

MARKET

In India, where 70 percent of citizens earn less than $5,000 a year, buying a

television is not an option for many consumers. Surprisingly, however, Indians

have shown remarkable interest in buying televisions, even the more-expensive

flat-panel sets, mostly because of increased awareness, rising availability and

declining prices.

India is emerging as a major force in the global television market in terms of

domestic consumption as well as in production of sets, while there remain

disparities in terms of the economic status of television buyers, set sales in India

are experiencing strong growth.

Indias television market is set to grow to 18.7 million units by 2011, expanding

at a Compound Annual Growth Rate (CAGR) of 9 percent from 12.1 million units

in 2006. On the revenue side, overall television sales will reach $4 billion by

2011, rising at a CAGR of 9.6 percent, up from $2.5 billion in 2006.

CRTs still dominate market

While Flat-Panel-Display (FPD) televisions are gaining sales momentum in India,

CRT televisions still have a leading position in the nation because the higher

prices of Liquid Crystal Display Televisions (LCD-TVs) and plasma sets have

discouraged their adoption in most parts of the country. Many consumers in

India buying their first television sets are looking at 21-inch and smaller CRTs as

starter sets. However, this carries over to the replacement market as well,

where consumers are attracted to 29-inch flat-face CRT TVs as alternatives toLCD-TVs because of their lower prices. It is the urban areas, where consumers

are looking for replacement sets or buying second televisions, where there is a

likelihood of flat panels gaining some market share.

Manufacturing onthe rise

Television set manufacturing continues to rise in India, with both domestic and

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overseas firms increasing their production bases in the country. This is due to a

number of reasons, including:

Low-cost skilled labour.Availability of a qualified workforce.An untapped domestic market.Special economic zones that provide tax-free environments.Other tax and financial support breaks.Factories in India are cropping up in less-developed regions because of tax

breaks given by the government in order to improve the living conditions of

citizens as well as to promote investments in television production in the

country. India has an excellent component supply base in terms of

manufacturing facilities for glass and colour picture tubes so it makes it a good

fit for companies striving to take advantage of this emerging market.

6.3 MARKET MEASUREMENT AND FORECASTING

Demand forecasting and sales forecasting are important for any marketing

planning and control as it serves the basis for comparison over a period of time.

Forecasting helps in identifying and solving marketing and sales problems.

Further, they are also used for setting performance standards.

If the marketer knows the different tools and their application and is familiar

with the market forces, most often, 90-95% of the forecast is good. Besides, it is increasingly felt that the forecast should generally be in a range rather than justhaving a single point forecast.

Forecasting exercise involve understanding market potential. Consider the

example of a product such as a T.V set .To estimate the market potential for T.V

sets in India, we have to know the number of households .Assuming that each

household will have a T.V set , we can say that that the market potential for T.V

sets is equal to the number of households in the country .And if we assume thatsix people constitute a household, we have about 142 million households Ideally,

this is the market .But then , we know that 25% of Indian population is below thepoverty line and hence will not be able to buy T.V sets Besides, almost 40% of

Indians are in low income group and given the prices of T.V sets, they too may

not be able to afford it. So, one is left with only 35% of the total population

which is the real market that needs to be targeted. One might ask why this is

so?

The answer lies in the fact that the size of any market is based on the number of

buyers who might exist for a particular marketing offer. These buyers need to

have three characteristics:

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Interest in the product

Income to be able to afford the product

Access to the product

Based on these characteristics .we have arrived at 35% of the total Indian

population to be the size of the total market. Market potential is the limitapproached by the market demand as industrys marketing expenditures

approach infinity, for a given environment, in other words, market potential

refers to the upper limit of market demand. It is important for us to understand

that there are three key terms involved in defining the market potential. These

are

Market demand

Marketing expenditure by the industry

Defined market environment

Market demand refers to the total volume that could be bought by a defined

customer group in a defined geographical area in a defined time period in a

defined marketing environment under a defined marketing programme. It is

important to note that demand could be measured in physical or monetary

terms. Demand is always for a specific time frame. An important dimension tobe understood is also the fact that market demand is not a fixed number but a

function of specific conditions. It is for this reason that it is called marketdemand function of market response function.

In the above example of T.V sets, as more income is generated in the Indian

economy following higher economic growth rate, the demand for T.V sets will

increase .The demand for Colour T.V sets boomed in 1982-84 as Doordarshan

started colour telecast, went commercial and beamed popular soap operas. We

know that at any given time there is only one level of industry marketing

expenditure. The market demand corresponding to this level is called marketforecast. Marketing demand as a function of industry marketing expenditure (assumes a

given marketing environment)

Marketing demand in two different marketing environments

This refers to a companys share of the total market demand, it is subject to all

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the determinants of the market demand, plus the determinants of the

companys market share.

Company Potential is the limit approached by company demand as its marketing

effort increases relative to its competitors. The absolute limit to this potential is

the market potential and this will be so only in a monopolistic situation.

Sales Forecast refers to the estimates of future sales of companys products.

Various research and report had analysed the trends and opportunities withinthe India market and predicts that by 2012, LCD TV shipments will surpass thoseofCRT TVs in India.

India has the second largest population in the world and an annual GDP growthrate of more than 8 per cent from 2002 to 2012, with a TV market that isprojected to be 1.3 crores (13 million) units in 2008. CRT TV accounts for 92.9 per cent of those units in 2008, followed by LCD TV with 6.6 per cent and PDP TV

with 0.5 per cent. However, research finds that the India flat panel TV market isjust at the beginning of a real growth curve, with Y/Y growth of more than 100per cent expected for each of the next five years. Growth will be driven by enhanced purchasing power, the digital broadcast (DTH, IPTV, STB cable)transition as well as consumer awareness and affordability of flat panel TVs. India's growing upper middle class is projected to be the greatest source of LCDTV purchasing power. Research analyses the favourable demographics wheremore than 23 Million Indiansgreater than the entire population of Australiawill enter this demographic in the next five years.

Meanwhile, major brands like Samsung, LGE, Sony and Philips and Indian local

brands like Videocon and Onida are all focusing promotional efforts around LCD

TV. Several Chinese brands are also targeting India with their first exports.

5.THE ROAD AHEAD

The rising rate of growth of GDP, rising purchasing power of people with higher

propensity to consume with preference for sophisticated brands would provide

constant impetus to growth of white goods industry segment. Penetration of

consumer durables would be deeper in rural India if banks and financial

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. While the consumer durables marketis facing a slowdown due to saturation in the urban 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. Currently, rural consumers purchase their durables

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

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

routine regular feature from the seasonal character.

Rural India that accounts for nearly 70% of the total number of households, has

a 2% penetration in case of refrigerators and 0.5% for washing machines, offers

plenty of scope and opportunities for the white goods industry.

The urban consumer durable market for products including TV is growing

annually by 7 to 10 % whereas the rural market is zooming ahead at around 25

% annually.

According to survey made by industry, the rural market is growing faster than

the urban India now. The urban market is a replacement and up gradation

market now. The increasing popularity of easily available consumer loans and

the expansion of hire purchase schemes will give a moral boost to the price-

sensitive consumers. The attractive schemes of financial institutions and

commercial banks are increasingly becoming suitable for the consumer.

Consumer goods companies are themselves coming out with attractive financing

schemes to consumers through their extensive dealer network. This has a directbearing on future demand.

The other factor for surging demand for consumer goods is the phenomenal

growth of media in India. The flurry of television channels and the rising

penetration of cinemas will continue to spread awareness of products in the

remotest of markets. The vigorous marketing efforts being made by the

domestic majors will help the industry. The Internet being now used by the

market functionaries that will lead to intelligence sales of the products. It will

help to sustain the demand boom witnessed recently in this sector. The ability

of imports to compete is set to rise. However, the effective duty protection is still

quite high at about 35-40 per cent. So, a flood of imports is unlikely and would

be rather need based.Reduction in import duties may significantly lower prices

of products such as microwave ovens, whose market size is quite small in India.

Otherwise, local manufacturing will continue to stay competitive. At the same

time, there will be some positive benefits in the form of reduction in input costs.

Washing machines and refrigerators will also benefit from lower input costs.

According to a study by the McKinsey Global Institute (MGI), Indian incomes are

likely to grow three-fold over the next two decades and India will become the

world's fifth-largest consumer market by 2025. In the given scenario, urban

markets will continue to fuel the Indian economy for quite some time to come.

Moreover, expenditure by the middle class accounts for the bulk of Indias urban

consumer expenditure. About 61 per cent of total urban income comes from

households that can be classified as middle classearning between US$ 1,493

and US$ 9,955 a year. Further, India is likely to see rapid urbanisation, with

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around 45 per cent of Indians living in urban areas by 2050, up from 30 per centin 2007-08, according to a study by National Council of Applied Economic

Research's (NCAER). According to a report by McKinsey, India's overall retail

sector is likely to grow to US$ 419.93 billion by 2015. According to global real

estate consultant, CB Richard Ellis, India has moved up to the 39th mostpreferred retail destination in the world in 2009, up from 44 last year. The

turnover of the organised retail segment in India is pegged at around US$ 8.1

billion. It is expected to reach US$ 51 billion by 2010. Retail opportunity is slated

to rise by about US$ 160 billion in India in five years. In urban India, modern

retail is likely to grow from the current 9.6 per cent of total retail to 26 per centin the next five years, as per Technopak Advisors The Indian consumer durables

market seems to be relatively untouched by the economic slowdown. The

consumer durable goods output witnessed a 2.5 per cent rise in durables outputin the first quarter of 2009, according to a report by the Development Bank of

Singapore (DBS).

Colour televisions have seen an increase in sales, growing 2 per cent to 2.8

million units in January-March 2009, according to the figures released by ORG-

GFK. Whirlpool is on the expansion mode and is targeting a 22 per cent share of

the US$ 423.28 million washing machine market in India by the end of 2009, and

is launching a range of new products with an investment of US$ 4 million for the

same. Moreover, a large number of hi-technology durables are expected to flood

the US$ 4.03 billion Indian durables market in 2009. Samsung, LG, Haier and

Videocon are among companies planning new product launches in the coming

months

6.CONCLUSION

The Indian consumer remains one of the most upbeat globally. The Nielsen

Global Consumer Confidence study, conducted by Nielsen, a market research

company revealed that Indians are "the most optimistic lot globally who think

that their country will be out of the economic recession in the next twelve

months." In fact, it is widely believed that the Indian market will fuel the growth

of multinational companies in the coming years. While most leading companies

are cutting costs in the US and Europe, they see India as a strategic market,which can fuel their growth.

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