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Project Report

On

BLUESTAR Ltd.

Marketing Strategy of the Company

By Satish Singh

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PREFACE

This project has been taken with a view to make an in depth analysis of latest &

unique marketing strategies employed by Blue Star Ltd. with special reference to Air

conditioners & thus uncover the reasons that have propelled the company to retain

its position as leading company in AC Industry despite of stiff competition from

other competitors.

The present study creates awareness about the product quality & unique features put

forth by Blue Star Ltd.

It also provides knowledge to the readers about customer preferences & competitive

analysis between various competitive firms.

The present is an effort to formulate strategy to boost up the market share for AC’s

for Blue Star Ltd.

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GENERAL INTRODUCTION

Few years ago liberalization was not there in the Indian market. But slowly and

gradually scene changes and liberalization paves its way in the Indian market.

Advent of liberalization policy has changed the whole scenario.

Liberalization policy

Leads to entry of MNC’s

Leads to technological

Advancement

Leads to Fierce

Competition

Which inturn Makes the

Customer a King

Therefore, today's winning companies are those who succeed best in satisfying

target customers. In other words winning companies are those who provide value

for money. They are market focused and customer driven, rather than solely

product focused or customer driven. The most wrenching change that the

business scenario is experiencing involves acquiring a strategy to cope with

liberalization.

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Rising temperature and unexpected climate has lead to the invention of Air-

conditioner system. Thus this leads to birth of new industry known as AC

Industry.

I have decided to conduct a Market research on Blue Star Ltd with special

emphasis on Air Conditioners. And I have selected exploratory design to conduct

the market research because it is the most sound research design that is likely to

achieve my research objectives. My goal is to explore rather than conclude on

the level of awareness that people have about Blue Star Air Conditioners. I was

interested in knowing the expectations and apprehensions people have from the

company. The Exploratory studies are used to seek small-scale information

rather than definite results. I also analyzed that this research design is relatively

inexpensive as compared to other research designs.

The main focus of this report is to study the customer satisfaction level with the

product performance in Delhi.

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OBJECTIVES OF THE STUDY

Primary Objective

The main purpose of this study is to determine different strategies that are

adopted by the company to achieve its targets. Moreover the strategies will be

evaluated to see which is best amongst them.

Secondary Objective

The secondary objective of the research is to find the image of the company

among the customers.

In brief Objectives include-

• Analyzing the Market strength of Blue Star Ltd.

• Identifying potential market for launching new product and increasing sales of

existing ones

• Explicit feed back on product performance

• Determine relative quality perception of Blue Star brand.

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RESEARCH METHODOLOGY

Secondary Data

I have used the secondary data relating to Blue Star Ltd. and have collected

following information about various range the company has, the technology being

used by company, their marketing strategies & information about the competitors.

All this information has been collected from the site “www.bluestarindia.com”,

“www.yahoo.com”, search engine of Google, magazines such as Business India,

Advertising & Marketing, Annual report of Blue Star Ltd. etc.

Primary Data

I have used personal interviewing where primary data can be directly collected

from respondents. The desired information was secured using Questionnaire.

At times I also asked questions as to why the respondent has chosen AC of a

particular company or what made him feel about that choice. I was keen to

ensure that the respondent was taking interest while filling the questionnaire.

This ensured collection of unbiased and accurate data.

To know the brand awareness, consumer perception about Blue Star and their

satisfaction level, the consumer personal survey was undertaken which was

based on non-disguised structure questionnaire.

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LIMITATIONS

Some of the dealers as well as the customers were not forthcoming with

information as they thought it to be a waste of time. Some customers were not

able to respond due to lack of awareness.

1) A number of dealers were biased towards a particular brand which was giving

them better returns.

2) Some of the shop owners were not available so, contacted person was not able

to present a fair view.

3) Respondent’s lack of time to give information and their casual attitude was a

big hindrance in the study.

4) The dealers were biased by some recent experiences which they had with a

particular distributor regarding the service or distribution.

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DEFINITION OF AN AC

Air conditioning is simultaneous control of air for:

• Temperature control

• Air freshness

• Filtration, Dehumidification within a confined space.

In other words, AC is defined as a process, which heats, cools, cleans and circulates air

and its moisture content.

Components of an Air Conditioner

The Air-conditioner consists of the following components

1. A Cooling Coil (evaporator coil)

2. A Condenser Coil

3. A Compressor and

4. A Fan Motor

Working of an Air-conditioner

A Window air conditioner cools room air by means of refrigerant. The refrigerant absorbs

heat from air and becomes vapour as it flows through the evaporator. A compressor

pumps the vapour to condenser, which discharges the heat and turns the vapors back to

liquid.

Three important working cycles of an AC are:

1. Room side close cycle

2. Outdoor open cycle

3. The Refrigerant cycle

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The room side close cycle

AC sucks the hot air from the room. The air is cooled, dehumidified and redelivered back

to the room, during the process the room gradually becomes cold.

Outdoor open cycle

The fan on the condenser side sucks the air from outside atmosphere and delivers it back

to the atmosphere after taking the heat from the condenser coil.

The refrigerant cycle

The closed cycle in which compressor compresses the refrigerant gas and delivers it to

the condenser coil and then to the evaporator coil and back.

Type of Air-Conditioners:

Window AC Window AC is the most compact, versatile and cheapest air-

conditioning system. It has the advantage of using single motor

for both compressor and cooling side. It also takes motor for

both compressor and cooling side. It also takes into advantage

of the usage of humidity, which is absorbed, from cooling sides

to lower temperature of condensing side.

Split A.C. It is the most versatile and cheapest air-conditioning system

where window AC’s cannot be provided. It has the advantage of

cooling any place irrespective of its location and just need a

passage three inch in diameter so as to connect both sides of

split AC. In split AC area covered is higher than the window

AC.

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Package A.C. It is used for larger areas where the tonnage is higher (approx.

3.0 tonne-15 tonnes). It consumes less power.

Central A.C. It is used for cooling the area where the tonnage required is

more than 50 tons. Though the capital cost is higher but the

running cost is very economical. In central air conditioning a

final air-conditioning is done through cold/hot water running

through tubes.

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COMPANY PROFILE

Blue Star Limited (originally known as Blue Star Engineering (Bombay) Pvt Ltd) was

founded by Mohan T. Advani in 1943. The Company was initially engaged in

reconditioning of refrigerators and air-conditioners.

Today, Blue Star is India's largest central air-conditioning company with an annual

turnover of Rs. 600 crores, a network of offices in 29 cities and three modern

manufacturing facilities.

Blue Star became a public limited company in 1969 with its corporate headquarters at

Kasturi Buildings in Mumbai.

Blue Star is India's largest and most preferred air-conditioning and commercial

refrigeration company.

With six decades of experience in providing expert cooling solutions, Blue Star has been

associated with the most prestigious corporate and commercial installations in the

country.

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BLUESTAR BUSINESS

Blue Star manufactures and markets a wide range of air-conditioning and refrigeration systems

and products. These include large central air-conditioning plants, packaged air-conditioning

systems, split and window air conditioners; commercial refrigeration equipment such as water

coolers, bottled water dispensers, ice-cube machines, deep freezers and walk-in cold rooms. Blue

Star's other businesses include marketing and maintenance of hi-tech electronic and industrial

products such as Testing Machines, Data Communication products, Medical and Analytical

Instruments and Special Control Valves.

The Company has business alliances with world-renowned technology leaders such as York

International, USA; Hitachi, Japan; Kolpak, USA; Vestfrost, Denmark; Electrolux, Sweden

and many others, so as to offer superior products to the customers.

The lines of business include Central Air-conditioning, Room Air conditioners, Commercial

Refrigeration, Commercial Equipment and Professional Electronics and Industrial Products.

The International Software Services business was spun-off into a separate company, Blue

Star Infotech Limited (BSIL) in April 2000. BSIL provides Internet/E-commerce, HP

3000/ MPE, BaaN ERP services, Client Server applications and Embedded Systems to

clients in USA, Europe and Japan. This software export business was started in 1983 and

is headquartered in Mumbai, at the Santa Cruz Electronics Export Promotion Zone

(SEEPZ) with offices in the U.S. and U.K.

LARGEST SINGLE SOURCE OF AIRCONDITIONING

EQUIPMENT

Blue Star is the largest single source for air-conditioning equipment in India. It offers the

widest range of air-conditioning products - window and split air conditioners, air-cooled /

water-cooled packaged air conditioners, centrifugal, absorption, reciprocating scroll,

rotary screw chillers, variable air volume systems, fan coil units, air handling units, etc.

Never seen, never heard, yet quietly at work in homes, hotels, offices, factories,

showrooms, airports, laboratories, satellite launch stations, hospitals all over India and

abroad. That's Blue Star air-conditioning.

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International Partnerships

In its quest to offer the most advanced air-conditioning technologies, Blue Star has

entered into several technical collaborations with York International, USA, Rheem

Manufacturing Co., USA and Climatrol, Italy for the manufacture of air-conditioning

equipment - centrifugal chillers, reciprocating chillers, screw chillers, air handling units.

And collaboration with York Tempmaster, for variable air volume systems.

ECO FRIENDLY

Blue Star has made significant progress towards minimizing and even eliminating the

environmental hazards resulting from CFCs in certain refrigerants used for cooling. As a

matter of fact, Blue Star is one of the few companies selected in India for funding by

"The Multilateral Fund for the implementation of the “MONTREAL PROTOCOL”. Blue

Star has already introduced 'ozone friendly' centrifugal chillers using HCFC-123, the safe

refrigerant replacing CFC-11. Blue Star also markets absorption chillers, which use water

as refrigerant. All Blue Star reciprocating chillers already use HCFC-22 refrigerant,

which is more friendly to the environment than the older R-12. The Company actively

promotes wider use of large refrigeration systems using ammonia as the refrigerant. In

fact, Blue Star is a member of the International Institute of Ammonia Refrigeration,

USA.

CROSSING INDIA'S BOUNDARIES

Blue Star's air-conditioning expertise extends beyond Indian horizons, from Indonesia in

the East to Libya in the West. Blue Star has competed with other European companies on

International terrain and satisfied demanding foreign consultants.

Blue Star has set up a joint venture in Malaysia with Arab Malaysian Development

Berhad (AMDB). The joint venture company has executed large turnkey Central

Airconditioning Contracts - 21-storey Bangunan AMDB, Kuala Lumpur, 35-storey

Menara Dion, Kuala Lumpur, 22-storey Menara Pelita, Kuching, Sarawak, 48-storey

Plaza MBF, Kuala Lumpur, 18-storey Tower A and Tower B AMCORP Trade Centre,

Petaling Jaya Selangor Darul Ehsan, 364-room Vistana Hotel, Kuala Lumpur, 269-room

Ritz Carlton Hotel, Kuala Lumpur, Arab-Malaysian SGB factory, Nilai, Negeri

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Sembilan, 275-room Castle Inn Hotel cum Office, Johor Baru, Johor Darul Takzim, 340-

room Hilton Hotel, Seremban, Nageri Semibilan Darul Khusus, 420-room Hotel,

AMCORP Trade Centre, Petaling Jaya, Selangor Darul Ehsan and Summit Centre

Shopping Complex, Selangor Darul Ehsan.

And the list of projects completed abroad is too long to be enumerated. Some of the most

notable are: Syria's Presidential Palaces Complex at Damascus, the University, Railway

and Radio and TV Establishments at Baghdad, the State Bank of Mauritius, the

Kewalram Indonesia P.T. Bandung, Henrick Hotel, Kuala Lumpur, U.S. Geological

Survey, Saudi Arabia and Hotel Krom, Russia.

INDUSTRIAL AND COMFORT COOLING - THE BLUE STAR

STRENGTH

When critical parameters are of paramount importance, when innovative solutions are

sought, when sophisticated technology is required, Blue Star's expertise in industrial and

comfort air-conditioning is clearly ahead.

Three fourths of all man-made fiber plants in India are air-conditioned by Blue Star:

Reliance, DCL, Raymonds, Shriram, Ceat, Sanghi, Orkay. Several of these have called in

Blue Star for repeat jobs.

A majority of software companies, hotels, airports, cinema halls and hospitals all over

India have been air-conditioned by us.

Blue Star has made engineering excellence a way of life and has been acclaimed by

renowned consultants like Chemtex, UDHE, Tata Consultants, Du Pont, Mecon,

Engineers India, Humphreys & Glasgow and Davy Powergas.

The Company's dedication to quality and detail, its capability in engineering design and

project management, and resources to provide efficient, cost-effective on-time air-

conditioning systems have made Blue Star a preferred company.

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CORPORATE VISION

The company has been working on its strong & broad vision based guidelines,

which aim at delivering world-class customer experience. For this it has been

constantly working for the customers & modifying its strategies in their favor.

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Types of Air-conditioning

The diagram below gives a broad idea of the different kinds of air-conditioning

systems available in the market for various applications.

Air conditioners are divided into Ducted Systems and Non-Ducted products

(unitary products). Ducted systems are normally chosen for air-conditioning large

spaces like office floors, showrooms, departmental stores, restaurants, etc.

Whereas non-ducted products (split air conditioners and window air conditioners)

are mainly used for air-conditioning smaller spaces like individual rooms in an

office or residence.

As the name implies, split air conditioners are split into two basic components -

the indoor unit (IDU) and the outdoor unit (ODU). These two units are connected

by refrigeration tubing and electrical wires that pass through an opening in the

wall, barely 10 cms in diameter. By keeping the relatively noisy components,

such as the compressor and condenser fan in the outdoor unit, the air-

conditioned space tends to be quiet. Split air conditioners are relatively more

expensive than window air conditioners but are preferred for spaces where there

is no window or which require a quiet environment.

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Types of compressors

As mentioned earlier the compressor is the heart of an air conditioner. Different

types of compressors are used in Window, Split, and Packaged Air conditioners.

These include reciprocating, scroll or rotary types. All these compressors are

hermetically sealed which means that the compressor consists of a gas-tight steel

shell within which is housed an electrical motor and a compressor unit.

a. Reciprocating compressors - These compressors typically have one or two

pistons mounted on the crank shaft extension of the motor. The motor moves the

piston through the crank shaft and each time the piston moves down, refrigerant

gas is sucked into the cylinder. When the piston moves up the gas is pushed

against the discharge valve which opens to let the compressed gas out. These

compressors are available from a small fraction of a ton upto 10 ton capacities.

b. Scroll compressors - These compressors are a recent innovation and are

extremely energy efficient. They have only three moving parts compared to

fifteen in reciprocating compressors and are eight times less noisy. Scroll

compressors use two interlocked spiral-shaped members, which enclose the

refrigerant gas in pockets between them. One of the spiral shaped members is

fixed while the other orbits causing the refrigerant to be squeezed into ever

decreasing pockets until it reaches the centre of the spiral from where it is

discharged. They are highly reliable and save up to 15% on power bills. They are

gaining fast acceptance over other compressors.

c. Rotary compressors - This type of compressor has a rotor eccentric to the

cylinder housing and blades, which slide to form a continuous seal for the

refrigerant gas. At the beginning of the cycle a volume of refrigerant gas enters

the chamber and as the cycle progress the nature of eccentricity squeezes the

gas thereby compressing it. Rotary compressors are considered unsuitable for

areas with high ambient temperatures and are limited to use in window and mini

split air conditioners. These compressors are not repairable and have to be

replaced in case of a breakdown.

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Product Range

Blue Star manufactures a range of Ducted Splits and Packaged ACs (both air-

cooled and water-cooled).

Through its agreement with Rheem, Blue Star has access to world class

manufacturing processes. The sophisticated facilities installed include: a range of

imported fabrication equipment; an advanced powder coating paint line; conveyor

belt system and an on-line computerized manufacturing resources planning

system, which streamlines and integrates the entire process. All of which ensure

that our customers get the best air-conditioning technology.

Packaged ACs

Air-cooled or Water-cooled, these versatile units in 5, 7.5, 10 & 15 ton capacities

can individually cool 75 to 250 meters of floor space. In multiples they can handle

entire floors and buildings. These come with imported compressors.

Optionally they offer packaged air conditioners fitted with scroll compressors,

which are significantly more reliable because of only

three moving parts within the compressor, compared

to 15 moving parts in reciprocating compressors. The

scroll compressors are also eight times quieter. We

have re-engineered the complete system to ensure a

saving of up to 25% on energy cost to the customer.

The range is 5.5, 8.3, 11 and 16.5 TR.

This product has already begun to revolutionize this market, and has captured a

significant market share in the few months after launch.

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DUCTED SPLIT AC

Ducted Split Air conditioners from India's

No. 1 central air-conditioning company

bring to offices, banks, software

development centers, hospitals, hotels,

restaurants and showrooms a new

concept of comfort cooling.

Advantages of Comfort Cooling

The cooling unit is safely tucked away and all that is visible are the sleek lines of

the ducting that blend so beautifully into your decor.

Sleek, slim and just 425 mm in height, the unit fits into false ceilings and gives an

ambience with low noise levels, as all internal surfaces are acoustically insulated.

Also available with imported energy efficient scroll compressors for higher

reliability, low noise and power saving. The range is 5.5 and 8.3 TR.

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SPLIT AC’S

Blue Star, India's leading central air-conditioning company, presents a state-of-

the-art range of Split Air conditioners.

Deluxe Hi - Wall Split

The problem with normal air conditioners is that while they start off cooling you

well, pretty soon they begin freezing you. A problem that we have cleverly taken

care of in our air conditioners. It has

an electronic thermostat that's

accurate and reliable, fuzzy logic

control that adjusts performance

automatically and an energy-efficient compressor amongst others. Manufactured

at Blue Star's state-of-the-art factory; it includes reliable components, excellent

after-sales service and friendly looks. It's just what you'd expect from the leaders

in air-conditioning.

CORDED HI - WALL SPLIT AIRCONDITIONERS

The Corded Hi-Wall Split Air conditioner, comes to you from the acknowledged

experts in air-conditioning technology, who are also the

most preferred - Blue Star. On offer is a wide range of

capacities. The lowest being 1 ton, and the highest, 4

tons. Each and every air conditioner is loaded with a

host of thoughtful and exciting features. After all, nothing less is expected from

the leaders in air-conditioning.

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CONCEALED SPLIT AC

You and your interior designer have taken enormous care to create great looking

interiors. You want to conceal the air

conditioner so that a neat central air-

conditioning look is maintained. Enter

the Blue Star Concealed Split. A

powerful machine that believes in efficiently working behind the scenes. Apart

from impeccable cooling, a Concealed Split is a big bonus when wall and floor

space is not available. It’s the sleekest indoor unit in the market and stands less

than 11" tall (conveniently allowing higher head room under a false ceiling). So, if

you're looking for the compliment to your dream office, insist on the Concealed

Split. Like everything with pedigree, it can only be felt and not seen.

Deluxe Hi - Wall Split Air conditioners

The Deluxe Hi-Wall Split Air conditioner comes to you from the acknowledged

experts in air-conditioning technology, who

are also the most preferred - Blue Star. On

offer is a wide range of capacities. The

lowest being 1 ton, and the highest, 4 tons.

Each and every air conditioner is loaded

with a host of thoughtful and exciting

features. After all, nothing less is expected from the leaders in air-conditioning.

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CASSETTE AIRCONDITIONING SYSTEMS

Blue Star, in its continuing effort to provide innovative cooling solutions for your

business, brings you the Cassette Air-

conditioning Systems. They not only

look contemporary, but are also

extremely quiet and installation friendly.

They blend beautifully with stylish

interiors by virtue of their excellent

looks, fit & finish. Their compactness and ability without necessary ducting

makes them an ideal choice where ducting is not practical (due to structural

constraints such as low cross beams).

WINDOW ACS - TURBO ROTARY DELUXE MODEL

Blue Star Turbo Rotary ACs come in innovative capacities. Like 1.25T. Which

means that you don't have to compromise and

settle for an AC of higher tonnage, and

consequently, higher power consumption. Both

these models are fitted with Mitsubishi

compressors for virtually silent operation and

come with anti-bacterial filters, corrosion resistant

blue fins and full function remote (optional). All in all the best AC deal you're likely

to get.

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WINDOW ACS - TURBO ROTARY SUPER DELUXE REMOTE

MODEL

Blue Star Turbo Rotary ACs come in innovative capacities. Like 1.25T. Which

means that you don't have to compromise and settle

for an AC of higher tonnage, and consequently,

higher power consumption. Both these models are

fitted with Mitsubishi compressors for virtually silent

operation and come with anti-bacterial filters,

corrosion resistant blue fins and full function remote

(optional). All in all the best AC deal you're likely to

get.

WINDOW ACS - DELUXE MODEL

Blue Star cooling standards are so high that even the experts recommend us.

Little surprise then when we were chosen to air-condition India's most prestigious

establishments. Like Parliament House, Bombay

Stock Exchange and the Reserve Bank of India.

You'll find this very expertise in cooling, in our

new window air conditioners. As well as brand

new exciting features. For example, an electronic

thermostat that's accurate and reliable, fuzzy

logic control that adjusts performance

automatically and a low energy-consuming compressor, besides others. Made at

Blue Star's state-of-the-art factory, your window ACs includes dependable

components, excellent after-sales service and stunning looks.

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WINDOW ACS - SUPER DELUXE REMOTE MODEL

Blue Star cooling standards are so high that even the experts recommend us.

Little surprise then when we were chosen to air-

condition India's most prestigious establishments.

Like Parliament House, Bombay Stock Exchange

and the Reserve Bank of India. You'll find this

very expertise in cooling, in our new window air

conditioners. As well as brand new exciting

features. For example, an electronic thermostat

that's accurate and reliable, fuzzy logic control

that adjusts performance automatically and a low energy consuming compressor,

besides others. Made at Blue Star's state-of-the-art factory, your window ACs

includes dependable components, excellent after-sales service and stunning

looks.

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STRATEGIES FOR GROWTH

Blue Star has identified mega air-conditioning projects within the country and abroad as

an opportunity area for growth. At the other end of the spectrum, the Company has

aggressive plans to enhance its share in the growing market for window and split air

conditioners, with a specific focus on corporate and commercial customers. Blue Star has

ambitious plans to expand its commercial refrigeration business as well. Encouraged by

the recent break-through orders from Sri Lanka, Yemen, Maldives and Armenia for water

coolers, room airconditioners and packaged airconditioners, the Company wants to

strengthen its exports operations as well.

MARKETING STRATEGIES

� Product Awareness

Advertising is the main tool in the hands of the company so as to make the

consumers aware regarding the different products available in the market. Above

all Advertising is a good business.

Advertising is the marketing force, which helps in mass selling and distribution.

The company gives their advertisements through

� Road side hoardings, banners & signboards

� Newspapers like ‘Times of India’, Hindustan Times’, ‘Navbharat Times’

� Magazines like ‘India Today’, ‘Business Outlook’, etc.

� It is about to begin with TV Advertisements

Consumers come across advertisements for their brands everywhere - television, print,

posters, Internet and through sponsorships and goodwill campaigns. With the changing

face and speed of communication today, the company is focussed on using media

specific to audiences.

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� Strong Dealer Network

The Company has got a strong dealer network all over India and the products are available in

each town and area.

� Credit Facilities & Discounts to dealers

Dealers, retailers, sub-dealers are also vital to be due to be given due importance. It is

also necessary to understand the dealers, retailers, and sub-dealers because they are one

of the important people who can push the sales of the company. It was found that dealers

mainly want that the company should give them credit facilities and discounts.

BLUE STAR is the overall winner in its category. And according to them the dealers are

also the controller of the sales to some extent. One of the important information is that

most of the dealers ask the customers to wait and assure him the delivery if the particular

brand is not available.

For Example, BLUE STAR comes out with new schemes for dealers every month for

special promotions. Special margins are made available to dealers from time to time.

Overall the company operates as many as half-a-dozen schemes at any given time.

Moreover the company ensures that dealer’s accounts are reconciled every quarter.

� Customer Care

It was found that the company more or less analyses what customers are looking for and then

incorporate those features in their products. The company provides quick & efficient after sales

services.

The service mission of BLUE STAR is to become the most customer-oriented company in the

country, by building a proactive service organisation that continuously strives to create customer

satisfaction, by internalising the best practices of customer relationships management.

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Wonderful Innovations in the Products

Blue Star launches stylish split air conditioners

Air-conditioning and Commercial Refrigeration major, Blue Star, has launched a new

range of hi-wall split air conditioners across the country. The new range comes in two

versions - one with an electronic controlled cordless remote and the other with an

electronic controlled corded remote.

Available in capacities ranging from 1 ton to 4 tons, these aesthetically appealing air

conditioners come with a host of features like fuzzy logic, sleep mode, programmable

timer, oscillating louvers, auto restart and non-volatile memory. The outdoor unit, which

houses the all important heart of the air conditioner, the compressor, is capable of

withstanding a 1000-hour salt spray test, making it an ideal choice for coastal areas.

These air conditioners are also attractively priced, starting from Rs 26,720 onwards.

Blue Star launches aesthetically appealing Cassette ACs

Central air-conditioning and Commercial Refrigeration major, Blue Star, has launched a

new range of contemporary and aesthetically appealing Cassette Air-conditioning

Systems. These systems blend beautifully with stylish interiors. Apart from its looks,

these systems are also extremely silent. Cassette air-conditioning systems is the ideal

choice where ducting is not practical, due to structural constraints such as low cross

beams and low ceilings.

The Blue Star Cassette ACs distribute cool air in four directions without ducting and

come with a host of powerful features apart from remote control for ease of operation.

They are also installation friendly. They incorporate a scroll compressor, which ensures

that the system is energy efficient and maintenance free. The systems come with newly

designed aesthetically superior low noise outdoor units.

The Cassette AC Systems are available in capacities of 2, 3 and 4 tons and are

attractively priced at Rs 86,700 onwards.

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Blue Star launches new Turbo Rotary Remote Air

conditioners

Blue Star has launched a new range of sleek, stylish and contemporary turbo rotary room

air conditioners. These air conditioners, which are available in unique capacities of 1.25

and 1.75 Tons, incorporate a Mitsubishi Rotary compressor, anti bacterial filters and

corrosion resistant condensers to ensure silent operation and substantial savings in

electricity bills.

Blue Star, who are currently leaders in the Air-conditioning segment, have nearly six

decades of experience in providing expert cooling solutions not only in India but also

overseas. Its commitment to add value to customers in terms of design, installation and

after sales service has resulted in it being associated with the most prestigious projects

and companies.

This latest offering from the stable of the Air conditioning expert includes advanced user

friendly features such as Sleep Mode, Programmable Timer and Fuzzy Logic apart from

Remote Control. The 1.25 Ton capacity is designed for cabins and bedrooms while the

1.75 Ton is positioned for bigger halls. These unique capacities fill the gap in the room

air conditioner segment where customers till now had the option of only 1, 1.5 or 2 Ton

capacities.

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OBJECTIVES OF THE COMPANY

• To ensure customer’s confidence through product quality & efficient & effective

service.

• To continually enhance Company’s worth to its shareholders and investors through

sound investment and profitable operation.

• To demonstrate a real concern for its employees and to constantly improve the

quality and value of their job and career advancement.

• To be a good corporate who contributes positively to its community by protecting the

environment and working for public welfare

• To respect the laws, rules and customers of the land and to ensure that the conduct of

all company activities will always be to the highest ethical standards

• To identify and determine suitable marketing strategic for boosting up the market

share of AC, particularly for Blue Star Ltd

• To make a detailed study of the Ac’s, in terms of its existing market size and future

market potential.

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SWOT ANALYSIS OF THE BLUE STAR COMPANY

Strengths:

� Only Blue Star manufactures open-type centrifugal chillers with ozone friendly

refrigerant HCFC 123

� Only Blue Star manufactures variable air volume systems for economic localized

cooling control

� Only Blue Star manufactures air handling units with dependable ratings to factory

precision and the widest choice with single skin, double skin, horizontal, vertical,

ceiling suspended and unitary.

� Air-conditioning of the largest number of synthetic fiber plants in India exceeding

25,000 Tons and 36 customers

� Largest Industrial air-conditioning contracts in India - RBI Note Mudran Private

Limited: Rs.40 crores.

� First to manufacture semi hermetic reciprocating compressors in India to

international standards

� First air-conditioning company to introduce the concept of a Comfort Shop.

� It has a strong setup, Willis Carrier Engineering Center, to provide technological

support to develop new products and upgrade existing ones.

� It has successfully introduced finance schemes that have taken air-conditioners out

of the luxury category and made it affordable for the homebuyer.

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Weaknesses

� Considered as premium brand so middle class people think it is unaffordable.

� Although BLUE STAR protects its Position in Domestic AC market but is

regularly losing market share.

� Market penetration is still very low.

� Low qualities resulting in exports prices being non competitive.

Opportunities

� Confederation of Indian Industry (CII) has urged the government to reduce special

excise duty (SED) on air-conditioners from 16% to 8% in the forthcoming budget.

� Opportunity to influence Growing Indian middle class in influencing their decisions

with regard to the products offered by Blue Star through comparatively lower

prices.

� Advent of Internet provides an excellent opportunity to reach to a large base of

customers and cut costs.

� The increasing presence of multinationals in India for manufacturing be it

Samsung, LG, Carrier, Hitachi, thus providing an opportunity for upgrading the

quality of manufacture in the country.

32

Threats:

� Likely to face fierce competition from domestic companies as they have well-

acknowledged brands, an extensive distribution network and better insights about

the local market conditions.

� Increased threat from cheaper imports, especially from China

� MNC’s like Samsung, Carrier, LG and Voltas are continuously raising

their share while Blue Star despite of increasing sales is losing its market

share.

33

INDUSTRY AND MARKET OVERVIEW

The air-conditioning industry has a total market size of approx. Rs. 1500 crores. It can be

classified into windows, split, packaged and Chiller Air-conditioners. The split is divided

into ducted and non-ducted. The window and split AC have a current market of Rs. 900

crores and the central including Chillers command a market of Rs. 600 crores.

Air-Conditioner in India

Product Segment Size (Rs. in crores)

Window and Split 900 (Approx.)

Central and Chiller 600 (Approx.)

The domestic Window Air-conditioner has been growing at the fastest rate but this has been

accompanied by increasing competition leading to low profit margins. Profits in this segment are

driven by volume growth.

Against most developing countries, Indian market is Window AC oriented - both

commercially as well as household. Considering the low penetration of AC’s, the

segment is likely to grow, at least for the next 5 to 10 years.

The market for air-conditioners was earlier dominated by the unorganized sector as a

result of high excise duty. This sector accounted for around 55 to 60% of the market

shares only 2-3 years ago.

The proportion used to be 30:70 during 91-92. Then lowering of excise duties from 110%

to 40% favoured the organized sector by narrowing the price gap e.g., a 1.5 ton air-

conditioner which costs Rs.45,000/- in 91-92, now costs below Rs. 30,000/- in the

organized sector against Rs. 24,000/- in the unorganized sector.

34

The Government Policy Regarding AC’s

The attitude of the government to the industry in general has been influenced by the

perception of white good as a luxury item. Only after 1993 did the government liberalize

its attitude towards white goods.

Till 1994, excise duty on AC’s varied from Rs.7,000/- for 0.5 tonne AC’s to Rs. 9,000

for 1.5 tonne models. In the 1994-95 to 1996-97 budgets, the govt. gave considerable

relief to the Air-conditioning sector. The excise duty was reduced from 80% to 60% in

1994-95 and from 60% to 30% in the following years. In the Exim policy, AC’s

continued to be in the negative list, which means they cannot be imported without license

or as baggage.

Profitability

Margins in the industry vary depending upon the segment, model and sizes, between a

broad range of 10 to 20%. However margins in the window segment are the least. But

these are reasonable in the case of Split AC’s. Even then, for players who have their own

Compressor Manufacturing facilities, margins are higher. Margins are highest in Central

and Packaged Air-conditioning segments ranging between 20-24%.

Important Factors

The important factors that govern profitability in the Air-conditioning Industry are

Product Technology, Volumes, Distribution Network, After Sales Service and

Aesthetics. Most critical in the Product Technology is the Compressor, which contributes

about 40% of the total cost. The most common type is reciprocating compressor. This is

well suited for the Indian conditions where dust and ambient temperatures are relatively

high. But the wear and tear is quite high necessitating frequent repairs.

The rotary compressor is suitable for conditions where temperature does not exceed 55

degree Celsius. Beyond this, its cooling efficiency decreases. Hence it is suitable for

coastal areas like Mumbai where temperatures are low as compared to central and

northern India. Also it cannot withstand voltage fluctuations, which are common in India

and once spoiled it cannot be repaired. But the advantage is that it is much more efficient

35

than the reciprocating one at moderate temperatures, consuming less power with

negligible wear and tear problems.

The latest compressor technology is the scroll compressors. It has no part, which can

cause wear and tear, is very efficient under variety of conditions and can be repaired

instead of being replaced. The three world leaders in compressor technology Copeland,

Bristol and Tacumbch already have a presence in India through their collaboration with

Kirloskar, Carrier Aircon and SIEL respectively.

Since this is a volume driven business in the window segment and technology driven in

the package segment, distribution network and after sales services are the deciding

factors in these two segments respectively. Being a consumer durable industry the

activities aspect too is important. While 40 to 45% of the sales in the window segment

come from first three months of April to June and the rest from the other months, there is

no such seasonality in other segments, so companies have to manage inventory with

minimum cost.

Outlook

During 2000-01 a total of about 7 lakh air conditioning units were sold and this is

expected to rise to a phenomenal 10 lakh units by the end of 2004. The industry has been

growing at a healthy compound rate of 30% for the past three years and this pace is

expected to continue in the near future. While the growth rate in the domestic window

segment is expected to be highest at around 50%, other segments are also expected to

register healthy growth rates of around 28%. With all the major players investing money

towards higher capacities and new entrants setting up their plants, supply is expected to

keep pace with demand.

Increasing income levels and change in life-styles have led to heavy demand for

consumer durables, esp. Air conditioners, washing machines and refrigerators. Since last

two three years they have penetrated most urban households.

Today, white goods is one of the most brand driven product segments where companies

success depends upon marketing power in terms of building brand equity and being able

to maintain and support nation-wide sales and distribution network is a prime

requirement for effective market penetration. The cost of servicing and maintaining big

36

distribution network is phenomenal and this is one of the factors that resulted in regional

restriction of some brands.

In future demand composition is expected to tilt towards corporates, as more electronic

gadgets are used at the work place. The focus will shift from comfort cooling, to process

cooling where precise ambient conditions have to be maintained which naturally means

that technology will play an important role.

Market Share

In Central Air-conditioning (30 tons and above)

This market has remained stagnant since past three years. Margins from this segment are

as low as 7-8%, which makes it less attractive compared to others. Leading players in

this segment are shifting their focus towards the faster growing segment-Room ACs.

Companies Market Share (%)

Blue Star 38

Voltas 17

Carrier Aircon 9

ETA 13

Suvidha 3

KPC/MCO 1

Trane 1

ABB-Flakt 1

Thermax 9

Others 8

Source: FY02 Balance sheet of Blue Star Ltd

37

In Ducted System (5-20 tons)

This is a segment, which lies in-between central and room ACs. These are packaged air

conditioners (PAC), fitted with scroll compressors, which are more reliable because it

has only three moving parts within the compressor, compared to 15 moving parts

otherwise. And more importantly it ensures saving of energy cost to the consumer.

Companies such as Blue star, who are leaders in central ACs are now vouching on about

50% future revenues from packaged air conditioners.

Companies Market share (%)

Blue star 33

Carrier 29

Voltas 21

Amtex 7

Others 10

Source: FY02 Balance sheet of Blue Star Ltd

In Mini Split Air-conditioners (1-3 tons)

The unitary products would include the window ACs and the mini-splits (without ducts).

These ACs are ideal for rooms with low heat loads. They are available in the capacity

range of 0.5 TR to 3 TR. The room AC sector caters to residential premises, offices and

small establishments. Overall growth rate in this segment is about 15%.

Split ACs are so named because the unit is 'split' into two parts. The compressor and the

condenser forming an outdoor unit and the cooling coil remaining as an indoor unit. Split

units can be with or without ducts. In PAC’s, the unit is placed in a separate room and

the cold air is carried through ducting to the required areas. It is suited for those

establishments that are not large enough to go in for a central system.

This segment is growing at 25%. With many more show rooms and commercial

establishments companies the future looks bright for this segment.

38

Companies Market share (%)

Carrier 42

Voltas 22

Amtrex 14

Blue Star 9

Videocon 3

Godrej 1

Others 9

Source: FY02 Balance sheet of Blue Star Ltd

39

Recent Developments

� Blue Star at the Threshold of VRF technology. The technology (called variable

refrigerant flow or VRF), invented by Daikin of Japan, is now being developed in

India by large and established players including LG, Voltas and Blue Star. Blue

Star, which currently imports and sells Sanyo VRF units in India, plans to

manufacture its own VRF ACs this year, and will position its products

competitively against imported ones.

� Blue Star recently executed four major projects to set up perishable cargo

handling refrigerated facilities at Ban galore, Pune, Hyderabad and Chennai

airports.

� Blue Star, leaders in airconditioning, have airconditioned many prestigious

establishments such as Parliament House, Bombay Stock Exchange and Reserve

Bank of India. It is this very same expertise that goes into their new window

airconditioners.

� Blue Star sets aside Rs 8 crore campaign- The Rs 601-crore Blue Star Ltd—

central airconditioning and commercial refrigeration major—has earmarked a

total investment of Rs 8 crore on a new campaign for this summer, Blue Star Ltd

vice-president (marketing) N Sivasankaran told FE. He added: “This is part of our

new brand-building exercise for promoting our entire range of Blue Star ACs. The

main objective behind the move is to showcase Blue Star’s strengths in providing

cooling solutions. The value proposition for the new campaign is ‘Cooling

solutions to help your business do better’ ’’.

Blue Star is planning to widen its reach for its recently launched ‘Help line Campaign’ to

many markets in India which will promote its toll- free number 1600-2222-00 to address

common customer queries. It includes queries such as what capacity of AC to buy,

whether to buy a window or a split AC among other things. Besides, it will also provide

an SMS option for cell phone numbers. For the purpose, the company has set up a

centralised call centre at Thane in Mumbai.

40

CONCLUSION

• Blue Star is the largest single source for air-conditioning equipment in India.

• Blue Star is India's largest and most preferred air-conditioning and commercial

refrigeration company.

• Through its strategic long-term tie-ups with key and critical auxiliary

manufacturers, Blue Star provides its customers many benefits.

• The brand’s vision is to deliver excitement to the consumers, by providing

comfort at its best.

• Complete control over core components & technology.

• The company has strong potential to grow & that through greater innovations.

• In addition to corporate sector the company has the option to step into the local

households by understanding their psychology.

• Blue Star is India's largest central air-conditioning company.

• In short it can be said that the company is still growing by making constant

efforts.

41

QUESTIONNAIRE

Name: ____________________________________

Address: __________________________________

Occupation: _______________________________

Age: ______________

Gender: __________

1)Are you aware of Blue Star AC’s?

(a) Yes � (b) No �

2) How did you come to know about the Blue Star AC’s?

� Television Ads

� Magazines

� Newspaper

� Internet

� Any Other

�

3) Do you have a Blue Star AC?

(a) Yes � (b) No �

4) Are you satisfied with your AC & the after sales service provided by the company?

� Yes

� No

42

5) What do you like the most about the Blue Star AC’s?

� Looks

� Price

� Durability

� None

6) How will you rate the pricing policy of Blue Star in comparison to other brands like Samsung, LG, Videocon, Carrier,Voltas etc.

� High

� Low

� Or Somewhere in between

7) If you have to buy one more AC then AC of which brand would you prefer

most?

� Blue Star

� LG

� Samsung

� Voltas

� Carrier

� Hitachi

� Any Other

43

8) What is your opinion regarding Blue Star AC’s?

� Reliable

� Long Lasting

� Technologically strong

� Innovative

� None

9) Any changes which you would like to bring among Blue Star AC’s.

� Improve Quality

� Increase variety

� Reduce Prices

� Introduce more schemes

� No Change

44

FINDINGS OF THE SURVEY

� Are you aware of Blue Star Ac’s?

(a) Yes � (b) No �

Yes-61 people

No-39 people

In a random sample of 100 people 61 people were found to be aware of Blue Star

Ac’s.

Awareness Against Blue Star AC's

0

20

40

60

80

1

People aware ofBlue Star Ac's

People not awareof Blue Star Ac's

45

� How did you come to know about the Blue Star Ac’s?

a) Television Ads

b) Magazines

c) Newspaper

d) Internet

e) Any Other

Means No. of People

Television Ads 9

Magazines 31

Newspaper 11

Internet 8

Any other means 2

Awareness through different means

15%

51%

18%

13% 3%Television Ads

Magazines

Newspaper

Internet

Any other means

46

� Do you have a Blue Star Ac?

(a) Yes � (b) No �

Yes-51 people

No-49 people

In a random sample of 100 people 51 people had Blue Star Ac.

Proportion of ownership

51

49

48 48.5 49 49.5 50 50.5 51 51.5

People having a

Blue Star AC

People having an

AC of other brand

Total no. of people

47

� Are you satisfied with your AC & the after sales service provided

by the company?

(a) Yes � (b) No �

Yes-45

No-6

Satisfaction level of people having Blue Star

AC's

88%

12%

People Satisfied

People not satisfied

48

� What do you like most about Blue Star Ac’s?

a) Looks

b) Price

c) Durability

d) Any other

e) None

Quality No. of People

Looks 11

Price 9

Durability 28

None 6

0

10

20

30

Total no. of

people

Looks Price Durability None

What people like most about Blue Star Ac's

No. of People

49

� How will you rate the pricing policy of Blue Star in comparison to other

brands like Samsung, LG, Videocon, Carrier,Voltas etc.

a) High

b) Low

c) Or Somewhere in between

Prices No. of people

High 19

Low 3

Somewhere in between 29

Pricing Policy of Blue Star being rated

by different people

37%

6%

57%

High Low Somewhere in between

50

� If you have to buy one more AC then AC of which brand would you prefer

most?

a) Blue Star

b) LG

c) Samsung

d) Voltas

e) Carrier

f) Hitachi

g) Any Other

Company No. of people in favour

Blue Star 28

LG 13

Samsung 6

Voltas 2

Carrier 2

Any Other -

0

10

20

30

No. of People

Blue Star Samsung Carrier

People's Choice

No. of people ine favour

51

� What is your opinion regarding Blue Star AC’s?

a) Reliable

b) Long Lasting

c) Technologically strong

d) Innovative

e) None

Quality No. of people in favour

Reliable 13

Long Lasting 15

Technologically Strong 21

Innovative 2

None 0

Opinion of people regarding Blue Star AC's

None

Technologicall

y Strong

Long Lasting

ReliableInnovative

Reliable Long LastingTechnologically Strong InnovativeNone

52

� Any changes which you would like to bring among Blue Star AC’s.

a) Improve Quality

b) Increase variety

c) Reduce Prices

d) Introduce more schemes

e) No Change

Recommendations No. of people

Improve Quality 1

Increase Variety 3

Reduce Prices 19

Introduce More Schemes 26

No Change 2

Recommendations by people

2% 6%

37%51%

4%Improve Quality

Increase Variety

Reduce Prices

Introduce More Schemes

No Change

53

Recommendations:

� In the coming years competition will intensify more, so companies will have to

fight hard to woo the customers. Crucial role facilitates price control. In other

words, lower down its cost of production.

� Company should improve there after sales service & should go for warranties for

long durations.

� Company should also come up with the new schemes for the customers. This will

help in attracting more and more prospects.

� It was found that most customers owning AC’s were interested in an exchange

offer. So, company can also consider exchange offer scheme to beef up its sales.

� Electronic media has a very effective reach in each and every potential household,

but Blue Star is not using this media. So Blue Star should stress on electronic

media to beef up its sales.

� The Advertisement should be such that customer develops an emotional

attachment with the product.

� Company should come out with 0% Finance Scheme. Due to this scheme more

and more prospects will enter into the customer base of Blue Star.

� The product must be available at most of the places keeping in mind that the

distribution cost should remain minimum.

� Last but not the least the company should introduce their consumer electronics

products. Such as Television and washing machines.

54

BIBLIOGRAPHY

MAGAZINES:

���� Advertising and Marketing.

���� India Today.

INTERNET SEARCH:

���� www.bluestarindia.com.

���� www.encyclopedia.com.

BOOKS REFERRED:

���� Kotler, Philips. Marketing Management, New Millennium Edition, 2000.