Introduction

indian Consumer durables market used to be dominated by few domestic players likeG o d r e j , V o l t a s , A l l w y n a n d K e l v i n a t o r . B u t p o s t l i b e r a l i z a t i o n m a n y f o r e i g n c o m p a n i e s h a v e e n t e r e d i n t o I n d i a n m a r k e t d e t h r o n i n g t h e I n d i a n p l a y e r a n d dominating Indian market the major categories in the market REFRIGRATOR, AIR CONDTIONERS AND WATER COOLERS

I n d i a b e i n g t h e s e c o n d l a r g e s t g r o w i n g e c o n o m y w i t h h u g e c o n s u m e r c l a s s h a s r e s u l t e d i n c o n s u m e r d u r a b l e s a s t h e f a s t e s t g r o w i n g i n d u s t r i e s i n I n d i a . L G & S A M S U N G t h e t w o K o r e a n c o m p a n i e s h a v e b e e n m a i n t a i n i n g t h e l e a d i n t h e industries with LG being leader in almost all the categories

Consumer durables major Voltas Limited will invest nearly Rs 500 crore in India this year in research and development, brand-building and other marketing initiatives.

The company, having a turnover of Rs 500 crore and market share of 17 per cent, is investing Rs 500 crore on brand-building and other marketing initiatives and aroundR s 5 0 0 c r o r e o n r e s e a r c h a n d d e v e l o p m e n t , b e s i d e s l a u n c h i n g n e w p l a t f o r m s i n information technology and related areas

B e f o r e t h e l i b e r a l i z a t i o n o f t h e I n d i a n e c o n o m y , o n l y a f e w c o m p a n i e s l i k e K e l v i n a t o r , G o d r e j , A l l w y n , a n d V o l t a s w e r e t h e m a j o r p l a y e r s i n t h e c o n s u m e r d u r a b l e s m a r k e t , a c c o u n t i n g f o r n o l e s s t h a n 9 0 % o f t h e m a r k e t . T h e n , a f t e r t h e liberalization, foreign players like LG, Samsung, Whirlpool, Daewoo, and Aiwa came into the picture. Today, these players control the major share of the consumer durables market .

Consumer durables market is expected to grow at 8-13% in 2009-2010. It is growing very fast because of rise in living standards, easy access to consumer finance, andwide range of choice, as many foreign players are entering in the market

With the increase in income levels, easy availability of finance, increase in consumer awareness, and introduction of new models, the demand for consumer durables has increased significantly. Products like washing machines, air conditioners, microwaveovens, color televisions (CTVs) are no longer considered luxury items. However, thereare still very few players in categories.

C o n s u m e r d u r a b l e s s e c t o r i s c h a r a c t e r i z e d b y t h e e m e r g e n c e o f M N C s , e x c h a n g e offers, discounts, and intense competition. The market share of MNCs in consumer d u r a b l e s s e c t o r i s 6 5 % . M N C ' s m a j o r t a r g e t i s t h e g r o w i n g m i d d l e c l a s s o f I n d i a . MNCs offer superior technology to the Consumers whereas the Indian companiescompete on the basis of firm grasp of the local market, their well-acknowledged

brandname, and hold over wide distribution network. However, the penetration level of theconsumer durables is still low in India & there is a yet a huge untapped rural market

Company Overview

Voltas Limited is a Public Limited Rs 2500 crore multi divisional company, engagedin the air conditioning and engineering business. It was incorporated on 6th September 1954. Tata Sons Ltd and Volkart Brothers, a Swiss Company operating in India since1851, promoted this company and hence the name VOLTAS.

Voltas, A Tata Group Company is India's premier air conditioning and engineering services provider. It provides engineering solutions for a wide spectrum of industriesi n a r e a s s u c h a s h e a t i n g , v e n t i l a t i o n a n d a i r c o n d i t i o n i n g , r e f r i g e r a t i o n , c l i m a t e control, electro-mechanical projects, textile machinery, machine tools, mining and construction, materials handling, water management, building management systems, p o l l u t i o n c o n t r o l a n d c h e m i c a l s . V o l t a s h a v e c a p a b i l i t y i n t h e m a n u f a c t u r e o f room/split air conditioners, industrial air conditioning and refrigeration equipment, w a t e r c o o l e r s , r e f r i g e r a t o r s , v i s i - c o o l e r s , f r e e z e r s , f o r k l i f t t r u c k s a n d l a r g e w a t e r s u p p l y p u m p s . A l l t h e s e p r o d u c t s b e a r t h e s t a m p o f s t a t e - o f - t h e - a r t a u t o m a t e d m a n u f a c t u r i n g p l a n t s r e s u l t i n g i n c o n s i s t e n t l y h i g h q u a l i t y a n d r e d u c e d c o s t s .

C o m p a n y i s p a r t n e r e d w i t h i n t e r n a t i o n a l c o m p a n i e s s u c h a s L G E l e c t r o n i c s a n d Samsung of Korea and Fedders International of USA for 'manufacture only' alliances producing low cost, high quality refrigerators and room air conditioners.

T h e c o m p a n y ’ s p r o m o t e r s , T a t a S o n s h o l d a r o u n d 2 8 p e r c e n t o f t h e s h a r e s i n t h e company. Foreign investors and the public hold around 21 per cent share each, whiledomestic financial institutions and non-promoter corporates hold the balance

Voltas has recently gone through a comprehensive restructuring exercise, aimed at bringing the ‘core to the fore’. This exercise, conducted between 1997-1998 and 2001-2002, comprised of redefining the business focus of Voltas as being an engineering.

s e r v i c e s c o m p a n y . A c c o r d i n g l y i t i n v o l v e d r e o r g a n i z i n g t h e c o m p a n y ’ s b u s i n e s s  portfolio, exiting non-core businesses and exploiting unproductive assets to generate revenues, rightsizing the organisation through focused voluntary retirement schemes, aggressive cost cutting and financial re-engineering

Areas of businessThe company mainly operates in the following areas:Company involved mainly into the design and manufacture of industrial equipment, management and execution of air conditioning and public work projects, sourcing ,installation and servicing of technology-based systems, and representation of global t e c h n o l o g y l e a d e r s , s e r v i n g d i v e r s e i n d u s t r i a l s e c t o r s a n d a p p l i c a t i o n s . V o l t a s ' operations have been organized into three independent business-specific clusters. Each of these has its own facilities for market coverage and service to customers. Namely:

Electro-Mechanical Projects & Services , Mechanical, HVAC & Refrigeration Solutions Electrical, Mechanical & HVAC Solutions(International) Water Management & Treatment

Engineering products & Services Textile Machinery Mining & Construction Equipment Machine Tools Materials Handling Solutions 

Unitary Cooling Productsfor Comfort & Commercial Use Cooling Appliances Commercial Refrigeration

UnitaryCoolingProductE

ngineering products &Services

Electro-Mechanical

Projects &Services

Air Conditioning Industry

Air Conditioners give respite from summer heat and have become a necessity. They havemade our lives comfortable. After a hard day's work you return home and switch on your air conditioner and let the fresh air relax you and rejuvenate your spirits. Once again youare ready to shop out with your family or help your spouse in household work or spend some quality time with your kids. India you desperately need an air conditioner. In this scorching heat it is only an air conditioner that can give you some respite and make you livelier and energetic. Earlier buying an air conditioner was not easy. It was very costlyand middle class families can't afford but now purchasing an air conditioner in India isno more tough and expensive. There are various companies offering air conditioner like LG, Hitachi, Samsung, Onida, Godrej, Sanyo, Cerrier, Bluestar, Voltas, Amtrex, OGeneral etc. These companies have various offices all over India. They have their ownstore and shops selling air conditioner of all types.

Air conditioner comes in various sizes and shapes. Some air conditioner does not even look like an air conditioner especially ones offered by LG. Their surfaces are too good looking and look like a beautiful scenery. There are room air conditioners, split air conditioners, car air conditioners, ductless air conditioners, air ceiling conditioner mount system etc

History of Air Conditioners

Air conditioning as we know it today is a rather new technology although differentform of cooling air and dehumidifying the air has been around for centuries. The ancientRomans used aqua duct water to circulate through the walls of the wealthiest homes. Thisis just one example of ancient air conditioning. The Chinese were also were also obsessedwith cooling the air through water and wind. They used various methods to cool their interior buildings and stay cool during the hot months. In the 1800's one man came closeto inventing what is similar to modern day air conditioning.

In 1820 British Inventor Michael Faraday discovered that ammonia could chill the air when compressed and liquidized and then allowed to evaporate. In 1841, John Gorrie, amedical doctor discovered that he could use compressor technology to create ice to cool his patients rooms in Florida. This discovery gave Gorrie the great aspiration of inventingthe first air conditioning unit. He came very close. His first pro type leaked and wasunsuccessful. He secured funding and his patent was approved in 1851. His funding partner died and he lost the money to see his dream realized. He later died in 1855 andwith him his vision of indoor air conditioning died as well for the next 50 years

The commercially available of air conditioning applications started based on the needto cool air for industrial processes than for personal comfort. The first electrical air conditioning was invented by Willis Haviland Carrier in the year 1902. He was alsoknown as the Father of Modern Air Conditioning. His invention was designed to improvethe manufacturing process of a printing plant. By controlling the temperature and humidity of the plant, the processes were made more efficient as the paper size and the ink alignment were consistently maintained. 

The Carrier Air Conditioning Company of America was established by him to meetthe demand of better productivity in the workplace. Today, Carrier Corporation is the biggest air conditioner manufacturer and marketing corporation in the world in central air conditioning.

The term air conditioning was first coined by Stuart W. Cramer of Charlotte, North Carolina in 1906. Cramer was trying to create ways to add moisture to the air in his textile plants. Cramer used the term Air conditioning in a papers filed to the patent office for hisinvention of a water conditioning unit which was required to control the humidity intextile plants. Willis Carrier took the term air conditioning and put it into his companiesname as he used evaporative cooling to provide a cooling effect in the air. 

The first air conditioners proved to be hazardous to human’s health when the toxicgases leaked. The use of ammonia, methyl chloride and propane. These toxic, flammablegases tended to leak causing fatal results. In 1928 Thomas Midgley, Jr. was the first tocreate an air conditioner that used Freon. This was found to be much safer for humans buthad disastrous effects to the environment

Modern day air conditioning has improved over the years. The emphasis these days are onenergy conservation and efficiency. The modern day air conditioner can come with allsorts of bells and whistles and most importantly is that it is available to just abouteveryone. The modern day air conditioning is affordable to everyone

PRODUCT & SERVCEOn the whole the data collected shows that under the various heads taken to conduct the survey Voltas’s performance overall is a mixed bag or I can say that it was 75:25of (good: bad). Finally I landed up to five most popular brands who are ruling the ACmarket; Voltas, LG, Samsung, Carrier and Hitachi. On the basis of these brands the further study has been carried out.

From the survey conducted we can determine that the overall presence of Voltas is equal to the other four brands, which would primarily mean that the reach of the brandto the people is satisfactory. Brands like LG and Samsung doing well because of their o v e r a l l b r a n d i n g d u e t o t h e i r p r e s e n c e i n o t h e r c o n s u m e r p r o d u c t l i k e L C D , refrigerators, Washing Machines etc.

But, on the counts of Shelf Space and Window Display Voltas is lagging behind LGand Samsung thus depriving the potential customers the first hand experience of the f u n c ti o n i n g o f t h e A C w h i c h m i g h t a l s o m e a n t h a t t h e b r a n d s w h i c h h a v e m o r e presence on the shelf might capture these customers

T h e P O P m a t e r i a l w h i c h i s q u i t e q u i n t e s s e n t i a l w h e n i t c o m e s t o c o n v i n c i n g t h e customer about the Brand’s features, providing it distinctness from the host of other competitors and in establishing the Brand Identity in the minds of the customers. Inthe survey it was found that Voltas is in the second position after LG when it comes tothe POP material in the outlets but this is not the complete picture the presence of LGin terms of the support material.

Continuing about the support material, the best support any brand can have is the wordof mouth preference that the dealers or the salespersons give to the customers as onlywhat they push has the maximum chance of selling. In the outlets visited it was foundthat Voltas although second, again lags behind LG by some margin.

While speaking about there preferences the dealers or the salespersons invariably givethe attributes of the brand that they are pushing and the negatives of others that theyadvise the customers against. The good news here is that the most spoken about positive attribute for Voltas (the good quality attribute) as against the most spokenabout positive attribute of LG (the low price attribute). So, we can safely assume thatthe positive attributes of Voltas are spoken about by the dealers/salespersons.

But here again there is a spoiler, which are the negative attributes of the Brands that the dealers/salespersons use to dissuade the customer buying a particular brand. Whiledealers claimed LG to be less durable, there were outlets that claimed that Voltas is priced too high. The result of which is that all the good work of the positive attributesis nullified

The best and the biggest international brands are here in India –but the irony if it all:where is the after-sales-service? So integral to a brand, so critical for its success and sotaken for granted in developed markets! In India, after sales service is, for want of a b e tt e r d e s c r i p ti o n , t h e p i t s . S o w h a t ’ s s t o p p i n g t h e s e c o n d b e s t a i r c o n d i ti o n i n g companies from pulling out all the

stops when it comes to providing the best service?Do customers expect for too much? Or is it that in India they don’t really care. BrandEquity fanned out to MNC as well as Indian consumer durable companies, stockiestand dealers, analysts and market researchers to get a feel of what’s really keeping after sales from being used as a cutting edge marketing tool in pushing products across categories.

C u s t o m e r s s u p p o r t f o l l o w i n g t h e p u r c h a s e o f a p r o d u c t o r s e r v i c e . I n s o m e c a s e s , a f t e r - s a l e s s e r v i c e c a n b e a l m o s t a s i m p o r t a n t a s t h e i n i t i a l p u r c h a s e . T h e manufacturer, retailer, or service provider determines what is included in any warranty(or guarantee) package. This will include the duration of the warranty traditionally oneyear from the date of purchase, but increasingly two or more year’s maintenance a n d / o r r e p l a c e m e n t p o l i c y , i t e m s i n c l u d e d / e x c l u d e d , l a b o r c o s t s , a n d s p e e d o f response. In the case of a service provider, after-sales service might include additional training or helpdesk availability. Of equal importance is the customer's perception of t h e d e g r e e o f w i l l i n g n e s s w i t h w h i c h a d e a l e r d e a l s w i t h a q u e s t i o n o r c o m p l a i n t , speed of response, and action taken

Types of Air Conditioners offered by Voltas:

Now when we talk of air conditioners, there are a number of makes and modelsavailable in the market. So as to say that there is a variety of sizes and types of AC’savailable for cooling rooms of different sizes. And in order to choose the perfect air conditioner for your room it is always advisable to have some extra knowledge aboutthe types of AC and their purpose as to which one is best for what kind of room.With the variety of air conditioners available in the market, it is very difficult tochoose the most suitable AC for our home or office. And if we don’t have a clue aboutair conditioner then it adds to our own disadvantage. There are mainly five types of air conditioner

1) Window mounted These are air conditioners that are usually fixed through thewindows, which have been designed typically for double hung windows. And it is oneof the most commonly used air conditioners as this is best for cooling a single roomfor the simple reason that these are easy to install, cheaper and works with almost allthe wiring system of your home. The price range varies from Rs. 12,000 to Rs. 27, 000on an average for room size the range varies from 10 meter square - 84 meter square

2)Split Air conditioner This type of air conditioner is best suited for rooms whosearea is up to 60 meter square and might cost you (approx) around Rs.16,000 to Rs.35,000 on an average (multi-split system). A split air conditioner consists of two parts:the indoor unit which is also called as the evaporator unit and the outdoor unit whichis known as the external condenser box and is installed outside the room or the building. And this is one main reason why most people opt for split AC’s, as duringthe operation, it doesn’t make any noise

which might distract your attention or annoyyou. Split AC’s are permanent systems which can either be installed at the floor levelor on the walls or on the ceiling. However, it can be very noisy and may create nuisance for your neighbors

3) Cassette Air Conditioner:These are air conditioners that are usually fixed into the sealing. This ultra thin air conditioner can be installed in any narrow ceiling. These are usually fit in places where it is not possible to fit either a Window or Split Air conditioner. The price range varies from Rs. 68,500 to Rs. 86,500on an average.

4)Slimline Air Conditioner:This type of air conditioner has been one of the most popular types for certain reasons. One major reason is that they can be easily moved from one room to the other and is often referred to as a mobile air conditioner. Being portable, it is easier to store when the summer season wears off.It is best suited for smaller rooms and for those  people who moves their houses very frequently. The only minus point is that they are quite expensive and the exhaust tube needs to be fitted each time. It has a separate indoor and outdoor section. It is recommended for rooms whose area is up to 35 meter square

5)Ductable Split Air Conditioners: Ductable air conditioners are those that are used to condition more than one room, in the same building .These kind of air conditioners are usually seen in institutions, big organizations, hotels etc. Duatables comes indifferent tonnages depending upon the space needed to be cooled. The prices of ductables vary depending upon the tonnage.Out of all the above mentioned air conditions the maximum selling would be the Split air conditioners Though window a/c will cost less and is easier to install. The downside is you will loose your view through the window and you will have more air leakage than a split unit. A window unit will be less efficient than the split also a slit a/c is much quieter than a window a/c. The split unit will add more value to the home and will be quieter.

Key Findings about Product

The product range is changed very frequently and the customers are not able torelate themselves to the products.

Spare parts are a major issue as they are not available readily. While comparingit to market leader LG spares are readily available.

Stock outs too are a major worry as products are not available on demand,especially during peak season.

There are a lot of complaints from customers about the machine making a lot of noise while running.

After sales service was criticized greatly. While most of the dealers &customers were happy with the after sales service provided by LG.

Installation too is a bit on a slower side when you compare it to LG. WhereVoltas takes approximately 48hrs to install the a/c LG takes half as much time.

The design & color of Voltas air conditioners is very simple & common.

People buy Voltas mainly because it’s a Tata group of company & also as it isthe pioneer in air conditioners in India.

By calculating the display share we found that in most of store LG has 50% display share almost all categories.

Demo calls also not done properly.

Recommendations about Product

•To improve after sales services provided. Instead of providing 2 free servicesVoltas must offer at least 3 like its major competitors. Also the time when ac o m p l a i n t i s m a d e a n d t h e c o m p l a i n t i s a t t e n d e d t o s h o u l d b e r e d u c e d . T h e company could also offer an extended warranty at a nominal rate.

•A v a i l a b i l i t y o f s p a r e s n e e d s t o b e l o o k e d i n t o . A s e p a r a t e t e a m c o u l d b e t o appointed to handle all spare part related issues.

•Better design could give it a huge leverage as in today’s world looks are givenhigh weighed. Different color panels could be used like that used by Godrej togive the product a better look. Also detachable panels could be popularized as  p e o p l e c o u l d s e l e c t t h e c o l o r o f t h e p a n e l s a c c o r d i n g t o t h e r e t a s t e &  preferences.

•In a lot of cases it was reported that dealers are not made aware about new product releases hence awareness about new products should improve the enthusiasm of dealers to sell a product as well.

•A separate sales person could be appointed by Voltas in major stores promotingVoltas exclusively. In most of the outlets visited it was observed that most of the dealers promoted LG as the first preference.

•To make efforts to make the machine a lot more silent.

•Product availability especially during peak season must be paint a lot of attention to. As I observed that there was not even a single window A/cavailable in the first half of June & there was a lot of demand for the same inthe market.

•A lot more must be spend on R & D activities & to introduce never seen beforefeatures and products much like Hitachi.

•Make the products more durable (increased life) as a numerous customers givea lot of importance to durability of product.

•On the counts of Shelf Space and Window Display Voltas is lagging behind LGand Samsung thus depriving the potential customers the first hand experience of the functioning of the AC which might also mean that the brands which havemore presence on the shelf might capture these customers hence rigorous effortneed to be made to increase the shelf space & window display in order to attainleadership position

•Voltas can come up with detachable panels. This will allow the customers to choose the color of there choice to match there room & taste.

Pricing

Definition: Pricing is the process of determining what a company will receive inexchange for its products. Pricing factors are manufacturing cost, market place,competition, market condition, Quality of product.Following is the price list of different air conditioner of Voltas:

Voltas Split AC Price List Voltas Windows AC Price List

Product Name Pric Product Name Pric

Voltas-Vertis GOLD 2.0T SAC 34,500/- Voltas-Vertis Elite 1.5 Ton 21,900/Voltas-Vertis GOLD 1.5T SAC 30,500/ Voltas-Vertis Elite 1.0 Ton 17,000/

Voltas-Vertis GOLD 1.0T SAC 24,500/- Voltas-Vertis Elite 0.75 Ton 14,000/Voltas-Vertis GOLD 0.75T SAC 18,500/ Voltas-Vertis Plus -2.0Ton 19,500/Voltas-Vertis ELITE 2.0T SAC 33,000/- Voltas-Vertis Plus -1.5Ton 17,500/Voltas-Vertis ELITE 1.5T SAC 28,400/- Voltas-Vertis Plus -1.0Ton 14,350/-Voltas-Vertis ELITE 1.0T SAC 20,100/- Voltas-Vertis Plus -0.75Ton 12,000/Voltas-Vertis ELITE 0.75T SAC 16,000/- Voltas-Vertis Premium 1.5Ton R 16,800/- Voltas-Vertis PLUS 2.0T SAC 28,500/ Voltas-Vertis Premium 1.5Ton M 16,400/Voltas-Vertis PLUS 1.5T SAC 26,200/- Voltas - Vertis Premium 1.0Ton R 14,500/- Voltas-Vertis PLUS 1.0T SAC 22,500/- Voltas - Vertis Premium 1.0Ton M 14,000/Voltas-Vertis PLUS 0.75T SAC 15,000/-

Average Price 21,123/- Average Price 16,171/-

Following is the price list of different air conditioner of LG

LG Split AC Price LG Window AC Price

PRICE PRICE LG LSA7JW2CFC12.0 Ton Split 37,000/- AcLG LSA5NW3VF1 1.5 Ton Split 27,000/-AC

LG LWA 2DW1 AF 10.75 TON 11000/-Window AC

LG LSA3NW2VF1 1.0 Ton Split 19,400/- AC

LG LWA 3EW1 DF11.0TON 14000/-Window AC

LG LSUC2BW1AF1 0.75 Ton Split 15,000/-AC

LG LW A3 FW1DD1 1.0 Ton 14000/-Window AC

LG LSNC2BW1AF1 0.75 Ton Split 15000/- AC

LG LWA 3 EW2DD1 1.0 Ton 14400/-Window AC

LG LSA3CW2VF1 1.0 Ton Split 19000/- AC

LG LWA5EW1DF1 1.5 Ton 17000/-Window AC

LG LSA3NW2VF1 1.0 Ton Split 19400/-AC

LG LWA5FW1DD1 1.5 Ton 15700/-Window AC

LG LSA3QW2VF1 1.0Ton Split 19400/-AC

LG LWA5VW1DT1 1.5 Ton 16200/-Window AC

LG LSA3QW2VF2 1.0 Ton Split 19400/-AC

LGLWA5HW2DD1 1.5 Ton 16990/-Window AC

LG LSA3FG2VTY1 1.0 Ton 20000/-AC

LGLWA5VW2DT1 1.5 Ton 17200/-Window AC

LG LSA3QW2VFR1 1.0 Ton Split 20000/- AC

LG LWA5HW3DD1 1.5 Ton 18200/-Window AC

LG LSA3CW3VF1 1.0 Ton Split 21000/-AC

LGLWA5VW3DT1.15 Ton 18400/-Window AC

LG LSA3NF5VFC1 1.0 Ton Split 23000/-AC

Average Price 19800/- Average Price 15375/-

One can notice significant difference in the prices offered by LG & Voltas. Today smarket is very sensitive to prices. The customers survey conduced reviles that nearly30% of the customers buying decision is influenced by the price offered of a particular product. Also most of the multi brand dealers were of the opinion that there is notmuch product differentiation, almost all the features of all brands are alike the onlything setting them apart is the price .As a customer you would tend to choose a product which has all the features and also which is the lowest on price. Hence LG byoffering such low prices has managed to capture the majority of the market share

The pricing policy for dealers varies depending upon the number of units sold by a particular dealer in a stipulated period of time (usually 1 month.).

Following is the Pricing & Incentives policy for dealers.

QUANTITY SCHEME

15-50 2 % On Basic To51-75 2.5 % On Basic To75-125 3% On Basic To126-175 3 % On Basic To176-220 4% On Basic To

^220 5 % On Basic To

QUANTITY INCENTIVES

15-50 500 ON WAC & 750 on SAC

51-75 750 ON WAC &1000 on SAC

^75 1000 ON WAC &1250 on SAC

As seen from the above table it is can be seen that while Voltas provides a minimumof 2% to dealers selling upto 50 units and a cash incentive of Rs. 500 on window AC& Rs. 750 on splits, while market leader LG provides its dealers with 8% incentivesfor the same & Rs. 500 on window AC & Rs. 750 on splits. Hence as a multi branddealer one would tend to push for LG as compared to to any other brand as it would bea lot more profitable.

In nearly all the multi brand dealers vested there primary preference was LG followedmy either Voltas or Samsung. The best support any brand can have is the word of mouth preference that the dealers or the salespersons give to the customers as onlywhat they push has the maximum chance of selling hence it would be vital for Voltasto offer higher margins to its dealers if it wanted to be the primary brand spoken aboutmy all dealers.

It was also observed that Big accounts such as Vijay Sales, Croma, Reliance Digital,Kohinoor and Snehaanjali are offered products at nearly 22% less than small dealers.In such a scenario it would get extremely difficult for small dealers to compete withthese giants.

Example: An air conditioner sold to a small dealer for a price of Rs.25, 000 the sameair conditioner would be sold to Vijay sales for 19,500. As a dealer there would be noways in which you could compete with these big dealers as far as price is concernedeventually resulting in loosing out the customer.

Key Findings about Pricing:•Voltas air conditioner are priced nearly Rs.2000 to Rs. 3000 higher than LG.

•The Incentives provided to small dealers is 5% less than that provided by LG

•Margins offered to big giants like Vijay Sales, Croma, Reliance Digital etc is far more than that offered to the small dealers .As a result small dealers would findit extremely difficult to compete with these heavy weights.

•One would rather not prefer to be a dealer of Voltas and buy the products fromthese giants themselves at a lower price than what Voltas can offer them.Example: As a dealer, Voltas offers me an incentive of 2% on 50 units sold. Iwould rather purchase the products from Vijay sales at a lower price and sell itat a higher profit margin.

•Spares too are a bit higher priced while comparing it to LG

•Initial dealership fees of Rs 50, 000 needs to be paid to become an authorizeddealer of Voltas.•Very low profit margins for dealers.

•From time to time LG provides free installation for its customers.

Recommendations about Pricing•Increase margins for all dealers.•Along with dealership fees provided the dealer with a free Voltas Air conditioner. This would serve 2 benefits firstly the dealer will feel he s paying less as he s getting a free air conditioner so he will not feel the pinch of shelling out 50, 000 & secondly as a customer you tend to observe the air conditioner installed in the dealers shop, while making your purchase decision you observe a Voltas ac installed in the dealers shop this will tend to boost your buying decision & will give you confidence in your buying decision. This would act as a promotion as well.

•Reduce the margins between the big & small dealers so that the small dealer shave a good chance of competing with these giants. •Offer incentives to dealers to achieve set targets Example: If a dealer meets his targets provided him/her with a free Ac or a cash incentive.

•Reduce prices of Air conditioner to match LG•Come up with Nano air conditioner for the lower middle class of people.

•Offer interest free loans for purchasing an air conditioner which is alreadyoffered by LG.

•A lot more should be spent on R & D activities and also on Advertising.

•Payments by customers can be made in installments.

•Free installation could be provided in off season

Place

The logistics (Supply Chain Management)

Visit to ware house

Logistics is the art and science of managing and controlling the flow of goods, energy, information, and other resources like products, services, and people, from the source o f p r o d u c t i o n t o t h e m a r k e t p l a c e . I t i s d i f f i c u l t t o a c c o m p l i s h a n y m a r k e t i n g o r   manufacturing without logistical support. It involves the integration of information, transportation ,inventory ,warehousing, material handling ,and packing .The operating responsibility of logistics is the geographical repositioning of the raw materials , work in process ,and finished inventories where required at the lowest cost possible.

Logistic Management is that part of the supply chain ,which plans, implements and controls the efficient .effective forward and reverse flow and storage of goods, service and related information between the point of origin and the point of consumption in order to meet customers’ requirements.

5R’s of Logistic followed by Voltas:

1. Right Time2. Right Place3. Right Condition4. Right Cost 5. Right Handling

The Factory is located at Bhandup &Bhiwandi there are three types of warehouse”:

1. Mother Warehouse2. Branch Warehouse3. Spare part ware house

The mother warehouse is that where the product from the factory are kept and from that warehouse ,the product are sent to the branch warehouse.

A warehouse ,is a commercial building for storage of goods .warehouse are used by manufacturers ,importers, exporters, wholesalers, transport businesses ,customs, etc They are usually large plain

Building in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.

5S’s of warehouse, which Voltas strictly follows.1 . S w e e p i n g2 . S o r t i n g3 . S y s t e m a t i c A r r a n g e m e n t4 . S i m p l i f i c a t i o n5 . S e l f - d i s c i p l i n e

In warehouse, the products are pinup with 3-color paper to get the knowledge aboutthe delivery.

1.Red Card – To stop the product going into market,2.Green card – To allow the product for delivery in market,3 . Y e l l o w C a r d – A f t e r t h e p r o d u c t l a b e l e d w i t h g r e e n , a l l o w t h i s t o m o v e i n marketDistribution Time:-•Local delivery – 24 hrs

•Upcountry delivery – 48 hrs

•Within 200 km. – 24 hrs.

•Beyond 200 km. – 48 hrs

The above distribution time is the time of delivery of products from warehouse to themarket place, which the logistic department follows to fulfill the demand in the marketat right time. In Voltas, we have the following process, which is followed in logistic through ERP

•Order Processing

•Invoicing

•Indenting•ReportOrder Processing booking for dealers /distributorsInvoicing after billing process/bill generationIndenting requirement (Pdt Unit to branch unit)Report distributed to

Findings about Place•It was found that Voltas had to go through a lot of nitigrity processes which aretime consuming hence resulting in slow delivery.

•While LG manages to delivery its air conditioners in a1 days it was found thatVoltas delivered its air conditioners in 2 to 3 days.

•The installation of the air conditioner too was found to be on the slower sidewhile comparing it to market leader LG.

•The market penetration can be increased by having more number of dealers.

•Only 2 warehouses in Mumbai.

Recommendations about Place

•Make process short & simple to ensure quicker delivery of final product.

•Improve the pace of installation at customers place.

•Reduce the delivery time from 2 to 1 day.

•Decide on the best possible channel of distribution keeping in mindcompany’s value to its customers.

•Developing operational excellence in sales forecasting, warehousemanagement, transportation management & material management.

•Having more number of dealers to increase the market reach.

•Having more number of warehouses at strategic locations could reducethe time lag

•Reducing the cost of logistics & passing on the benefit to the consumer.

•To reduce octroi charges the movement could be directed via Goa as it’san octroi free zone.

Promotion

Retailers communicate with customers through five vehicles

•Advertising

•Sales Promotion

•Publicity

•Store Atmosphere &

•Personal selling

Advertising: form of paid communication to customers using mass media like TV,  N e w s p a p e r , a n d R a d i o . H e r e t h e a d s p e n d i s s o m e t h i n g t h a t h a d t o b e v e r y carefully planned. In the months preceding summers (April to June & October)t h e a g g r e s s i v e a p p r o a c h n e e d s t o b e a d o p t e d , a s t h e A C m a r k e t i n I n d i a i s seasonal. The key here is to provide information to the customer when he is on t h e l o o k o u t . I t s a d c a m p a i g n s l i k e “  Jagmag Desh Mera” & “India ka dil… India ka AC” are emotional appeals to Indians. Voltas, the first company in India to manufacture an indigenous air-conditioner in1954, was also the first to launch the split AC in 1982. Over five decades of  operations, Voltas has introduced India to newer cooling technologies. That is why the India ka Dil, India ka AC campaign resonates so strongly with Indian consumers, appealing to their pride in the new emerging India. An Indian brand a t h e a r t , V o l t a s u n d e r s t a n d s t h e n e e d s a n d c o n c e r n s o f t h e c o n s u m e r . T o Indians, an AC is not just a cooling appliance; it is a device that enables them to provide care and comfort to those they love. While consumers are moved by this emotional plank, they are also aware that every Voltas product is supported by state-of- the-art technology, a robust after sales services network and the i n h e r e n t a s s u r a n c e o f b e i n g a T a t a p r o d u c t . T h e a p p e a l o f V o l t a s l i e s i n t h e v a l u e s a n d e m o t i o n s i t s t a n d s f o r . T h e b r a n d a l s o i m p l i e s d e p e n d a b i l i t y i n d e l i v e r i n g v a l u e t h r o u g h e n g i n e e r i n g a n d i n n o v a t i o n . V a l u e , a c c o r d i n g t o V o l t a s , m e a n s p r o v i d i n g t h e c u s t o m e r s a t i s f a c t i o n i n t e r m s o f p e r f o r m a n c e , durability and cost. Like the Tata brand, Voltas too is being seen as a brand which effortlessly combines the traditional with the modern, a brand that has deep roots in India and a global outlook to take on the world

Sales promotion; Paid impersonal communication activity that offers incentive to customer to purchase a product like coupons, contests, discounts etc. in the bigger outlets like Vijay Sales there are invariably schemes offered on the purchases, which include free tour packages, discount coupon schemes etc. which increase the foot falls in the showroom thus increasing the probability of sales. The showrooms that offer such schemes are of prime importance to the company as the awareness regarding such showrooms is very high amongst the customers.

Publicity; I s c o m m u n i c a t i o n t h r o u g h s i g n i f i c a n t u n p a i d p r e s e n t a t i o n a b o u t t h e retailer. For example the newspaper coverage of any special event conducted by the retailer. In newspapers like the Midday there are a lot of Ads give by the retailers for their showrooms along with the brands of AC, this also fetches important publicity to the AC companies

Store atmosphere; paid impersonal communication is combination of stores physical characteristics like signs, displays, color, lighting etc, which create an image about stores service, pricing, fashion ability of merchandise. This is one of the areas that we covered under our project. The figures for store atmosphere are- of the total 50 outlets for the Mumbai Region 22 had the POP Material for Voltas Air Conditioners. This figure is second after LG, which has a presence in 31outlets with its POP Material.

Personal selling: Is communication process in which sales people assist customers in s a ti s f y i n g t h e i r n e e d s t h r o u g h f a c e - t o - f a c e c o n v e r s a ti o n . I t i s p a i d p e r s o n a l conversation. This as another head covered under the project. The Dealers/Sales people at majority of the outlets speak highly of LG’s low price & good quality (21 outlets),as the most running brand (31 outlets) and good after sales (10 outlets). Where as for Voltas the most spoken about positive features are good quality (19 outlets), and better electricity efficiency (20 outlets). Thus the positive feedback from the outlets is almost the same but the difference creeps in when it comes to the negative features given by the Dealers/Salespersons Voltas has a problem as 25 outlets allover Mumbai claim it t o p r i c e d t o h i g h a n d 1 6 c l a i m i t t o b e p o o r o n t h e a ft e r s a l e s f r o n t . F o r L G t h e negative feedback is very low as there are overall only 10 outlets claiming it too are on the quality. This is one of the major differentiating factors.

Communication elements and consumers decision making process

The above figure shows which communication methods most effective at various stages in the decision are making process. For egg: for creating awareness/knowledge Signs, Advertising, and Publicity are very important.

Continuous Patronage and loyalty/repeat visits are developed through communication directed at positioning the store and through service provided by Sales people. Favorable attitude and visiting the

Awareness Knowledge

Signs Advertising Publicity

Favorable

Attitude

Sales people Image advertising (shop)Store Atmosphere

Visit Store Sales Promotion POP Displays

Repeat VisitsPositional Advertising Personal Selling / Sales Promotion POP Displays /Positional Advertising Personal

store is very important from the sales point of view these 2 factors are dependent on the dealer preference, image of the shop, the atmosphere inside the shop, sales promotion carried out by the dealer, and the effective use of the POP material by the dealer is very important.

In the overall analysis we found that the dealer preference for LG was the most, in 21outlets out of 50 LG was the top brand while in 36 outlets it figured among the top three brands.

Voltas was the top brand in 14 outlets while in 29 outlets it figured among the top three brands.

In the use of POP material again LG was the top brand, 21 outlets made proper use of the POP material for LG out of 50, while for Voltas 11 outlets made use of the POP material provided by the company.