consumer durables final project

8/7/2019 Consumer Durables Final Project

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Overview

Indian consumer durables market used to be dominated by a few domestic players like Godrej,Allwyn, Kelvinator, and Voltas. But post-liberalization many foreign companies have enteredinto India, dethroning the Indian players and dominating the market. The major categories in themarket are CTVs, refrigerators, air-conditioners and washing machines.

India being the second fastest growing economy with a huge consumer class has resulted inconsumer durables as one of the fastest growing industries in India. LG and Samsung, the twoKorean companies have been maintaining the lead in the industry with LG being the leader inalmost all the categories.

The rural market is growing faster than the urban markets, although the penetration level in ruralarea is much lower. The CTV segment is expected to the largest contributing segment to theoverall growth of the industry. The rising income levels, double-income families and increasingconsumer awareness are the main growth drivers of this industry.

This report highlights the significance this industry has for the Indian economy, throwing lighton the pre and post liberalization scenario. It discusses the important segments of this industryand the growth patterns, trends and the demand drivers. The report also profiles the key playersof this industry, with a discussion of their business strategies.


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INDUSTRYSTRUCTURE

Introduction :

Before the liberalization of the Indian economy, only a few companies like Kelvinator, Godrej,

Allwyn, and Voltas were the major players in the consumer durables market, accounting for no

less than 90% of the market. Then, after the liberalization, foreign players like LG, Sony,

Samsung, Whirlpool, Daewoo, 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 10-15% in 2010-11. It is growing very fast

because of rise in living standards, easy access to consumer finance, and wide range of choice, as

many foreign players are entering in the market.

On the flip side, the presence of a large number of players in the consumer durables market

sometimes results in excess supply.

SECTOROUTLOOK

There has been strong competition between the major MNCs like Samsung, LG, and Sony.

LGElectronics India Ltd. Plans to spend US $83.3 million on R&D activities worldwide,

which includes developing a design and research facility at its Greater Noida unit in India. The

company is going to invest $250 million in India 2011 and is planning to establish a

manufacturing facility in Pune.

The Indian companies like Videocon Industries and Onida are also planning to expand.

Videocon has acquired Electrolux brand in India. Also, with the acquisition of Thomson

Displays by Videocon in Poland, China, and Mexico, the company is marking its international

presence.

According to isuppli Corporation (Applied Market Intelligence), country's fiscal policy has

encouraged Indian consumer electronic industry. The reduction on import duty in the year 2005-

06 has benefited many companies, such as Samsung,LG, and Sony. These companies import

their premium end products from manufacturing facilities that are located outside India.


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Indian consumers are now replacing their existing appliances with frost-free refrigerators, split

air conditioners, fully automatic washing machines, and color televisions (CTVs), which are

boosting the sales in these categories.

Some companies like SamsungElectronics Co. Ltd. and LGElectronics India Ltd. are now

focusing on rural areas also. These companies are introducing gift schemes and providing easy

finance to capture the consumer base in rural areas.

Consumer Electronics

The CTV production was 15.10 million units in 2007-08 and is expected to grow

by at least 25 per cent. At the disaggregated level, conventional CTV volumeshave been falling while flat TVs have grown strongly. Market sources indicate

that most CTV majors have phased out conventional TVs and have been instead

focusing more on flat TVs. The flat segment of CTVs now account for over60 per

cent of the total domestic TV production and is likely to be around 65 per

cent in 2007-08.High-end products such as liquid crystal display (LCD)and

plasma display CTV grew by 400 per cent and 150 per Cent respectively in 2009

10 following a sharp decline in prices of these products and this trend is

expected to continue. The audio/video player market has seen significant

growth rates in the domestic market as prices have dropped. This trend is

expected to continue through 2009- 2010, as competition is likely to intensifyto scale and capture the mass market.


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The IndianConsumer Durables Industry can be segmented into 3 KeyGroups

White Goods

Refrigerators Washing Machines Air Conditioners Speakers and Audio Equipments

Kitchen Appliances/BrownGoods

Mixers Grinders

Microwave Ovens Iron Electric Fans Cooking Range Chimneys

Consumer Electronics

Mobile Phones Televisions

MP3 Players DVD Players VCD Players


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SWOT ANALYSIS

Strengths

1. Presence of established distribution networks in both urban and rural areas

2. Presence of well-known brands

3. In recent years, organized sector has increased its share in the market vis a vis the unorganized

sector.

4. Government policies in favour of Industry includes infrastructure development, reduction in

excise duty and so on.

5. Advancement of technology which gives the companies ability to introduce new products and

new product features.

Weaknesses

1. Demand is seasonal and is high during festive season

2. Volatile performance of the agricultural sector have a negative impact on demand. The sectors

performance is highly dependent on monsoon and reforms, which has failed often.

3. Poor government spending on infrastructure

4. Low purchasing power of consumers

Opportunities

1. In India, the penetration level of white goods is lower as compared to other developing

countries.

2. Unexploited rural market

3. Rapid urbanization

4. Increase in income levels, i.e. increase in purchasing power of consumers

5. Easy availability of finance

6.Diversification. Developing new products for new market.


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Threats

1. Dozen companies operating in white goods segment. Price would continue to remain

depressed and margins will be under pressure.

2. Cheap imports from Singapore, China and other Asian countries.


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MICHAEL PORTERS FIVE FORCEMODEL

Michael Porters Five Forces Model provides a robust and time-tested framework for

analysing any industry, reflected in the strength of the five forces (industry competitors, potential entrants, threat of substitutes, power of buyers and power of suppliers). The

collective strength of the five forces determines the ultimate profit potential in an

industry, Where profit is measured in terms of long-term returns on capital invested. The

elements of each of the above forces and the extent and /or effect of each element in the

context of the television industry have been analysed and enumerated below. The Porters

Five Forces tool is a simple but powerful tool for understanding where power lies in a

business situation. This is useful, because it helps you understand both the strength of

your current competitive position, and the strength of a position youre looking to move

into. With a clear understanding of where power lies, you can take fair advantage of a

situation of strength, improve a situation of weakness, and avoid taking wrong steps. Thismakes it an important part of your planning toolkit. Conventionally, the tool is used to

identify whether new products, services or businesses have the potential to be profitable.

However it can be very illuminating when used to understand the balance of power in

other situations.

Degree ofRivalry

Degree of rivalry denotes the intensity of competition within the industry. Videocon, LG,

samsung, Sony, Onida, are the big competitors in television industry. Although Videocon,

another major player has managed to hold its own in the midst of the onslaught from the

Korean majors, though profits have suffered. Other large Indian companies in the top of

the list are Mirc Electronics. While Mirc Electronics is managing to hold its share by

adopting value for money strategy, BPL is facing tough time, experiencing drastic decline

in market share. Sony, Philips, Akai, Sansui, Aiwa, Toshiba and Hyundai are the other

foreign brands in the market. The industry is based on numbers game and companies will

have to maintain a fine balance between catering to lifestyle requirements and meeting the

needs of average consumer.


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Competitor Analysi s

A detailed analysis of some of the major players is done below:

LGELECTRONICS

LG Electronics rightly understood the consumer motivations to create magnetic products,

price them strategically, position them sharply and keep making the magnetism more

potent. Having understood the finer differences in consumer motivations, it opted for

sharp- arrow reasons-to-buydifferentiation over the blanket-all approach taken by most

of the other players. It is an aggressive marketer. It focuses on low and medium price

products.

SAMSUNG

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

global brand. After facing stiff competition from another Korean major- LG, Samsung

also started playing price game. In 2004 it reverted back to its premium positioning,

although it resulted in some loss of market share. In line with the Global Digital Initiative

of the Parent Company, Samsung India is seeking to acquire digital leadership in India by

introducing its digital ready televisions like the 40" LCD Projection TV, 43" Projection

TV and the Plano series of Flat Colour televisions.

ONIDA

Its popular devil ad although had engendered a strong emotional pull towards the brand,

technologically it represented no advancement. The company plugged the gap by touting

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

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

export front. It has technical tie- up with the Japan Victor Company, better known as JVC.

So focused is Onida on positioning itself on the

premium, high- tech plank that it is even planning to push its own envelope on

obsolescence, much. The strategy is aimed at further broad basing the product offering of

the company, which has largely dominated the top-end of the television market, across

multiple market segments.


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VIDEOCON

Videocon has always been a price player and has an image of a low price brand. This

entails providing more features at a given price vis--vis competitors. It has taken over

multinational brands to cater to unserved segments, like Sansui- to flank the flagship

brand Videocon in the low to mid priced segment, essentially to fight against brands likeBPL, Philips, Onida and taken over Akai- tail end brand for brands like Aiwa. Videocon is

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

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

distribution network in India with more than 5000 dealers in the major cities. It also has a

strong base in the semi-urban and rural markets. Due to its multi-brand strategy, it has at

present multiple brands at the same price point. This has led to a state of diffused

positioning for its brands. It has also led to a cannibalisation of sales among these brands.

The flagship brand Videocon has lost market share due to the presence of Sansui in the

same segment. Because of reduction in import duties on CPT the cost advantage of

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

exports.

Besides understanding the strategy adopted by different players, several other factors

industry growth, concentration and balance, corporate stakes, fixed cost, and product

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

Players.

The threat of potent ia lnew entrants (low)

High capital required entering into television industry, which needed large investment on

technology, distribution, service outlets and plant. Difficulty for customers in switching

cost, when they are satisfied with their current product as well as difficultly for new

entrants to have product differentiation because customers had already familiar with those

established consumer electronics companies, therefore new entrants have to spend a lot on

branding and customer knowledge. It is difficult to obtain a license; successful applicant

has to undergo through a form of competitive evaluation, such as a comparative evaluation

process. Threat of entry is determined by the entry barriers, which act to prevent new

firms from entering the industry. A lower entry barrier makes it difficult for the existing

producers to remain profitable for long. When profits increase, additional firms will enter

the market to take advantage of the high profit levels and over time drive down profits of

all firms in the industry. When profits decrease, some firms will exit the market, thus

restoring the market equilibrium. Barriers to entry arise from several sources.


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Access to DistributionChannels

A strong distribution network is absolutely essential to compete in this industry. Not only

does it guarantee a country wide reach for a companys products but is also necessary forproviding good after sales service. Videocon has implemented ERP system, which helps in

integrating the

manufacturing, marketing, procurement and distribution services with the corporate office

LG Electronics sells in 1800 towns and cities with a population of 1,00,000 and above.

Samsung also has a widespread service network, which includes 123 exclusive service

centres and 200 distributors in any town with more than 1 lakh population. All BPL

dealers are linked via VSAT nodes, ensuring online availability of information on

inventory status and sales movement. Distribution hence is difficult and costly as

established firms dominate distribution. Large incentives are required to gain entry intothe distribution channels and further gain recommendation to retailers from the dealers.

Brand Salience

With little product differentiation and parity products, it is imperative that distinct images

are created in the minds of consumers through positioning and brand building. MNCs have

been able to compress the cost of brand building by amortising the cost of sponsoring

international events across a larger footprint straddling multiple countries.

CapitalInves tment and Economies ofSca le

Television industry is capital intensive and players have made huge investments in putting

up state of the art manufacturing facilities. Videocon has seven manufacturing site in India

Sony India had a production capacity of 300,000 CTV sets with capacity utilisation of

66%. Samsung is investing $4 mn to expand its CTV manufacturing capacity at Noida to

800,000 units per year. The existing capacity of the plant is around 600,000 units. Other

players like Mirc Electronics, LG have also set up manufacturing facilities in India. The

market players need sales volume to achieve economies of scale, which is difficult because of large number of competitors. Apart from investments in manufacturing the

industry requires huge working capital to manage inventories. Supply chain mgmt. and

inventory management thus becoming crucial to determining profitability. With regard to

sourcing funds, MNCs are better placed Than their Indian counterparts as they manage to

get funds from their parent Companies at low rates of interest. Huge capital requirement

thus can act as barrierto entry.


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Threat ofSubs titutes goods (low)

In Porters model, substitute products refer to products in other industries.there is few

substitutes from other industry if any. Most of them seem to be obsolete or have one footout of door. Internet though emerging as an infotainment medium is very low in

penetration. Moreover the industry has responded to the future threat by introducing a TV

that can provide functions of the Internet along with regular features, e.g., BPL digital that

includes Internet and cellular facilities.

Bargaining power of Buyer (high)

The power of buyers is the impact that consumers can have on a producing industry.

Buyer power influences the prices that a firm can charge. Buyer power is influenced byvarious factors as follows:

Buyer Concentration

The industry is akin to consumer durables whose end users are fragmented. Hence buyers

do not have any specific influence on producers.

Buyer Swi tching Cost

The cost incurred by consumer in switching from one television brand to another is

practically zero. Brand loyalty is low. Hence the companies cannot rest on their laurelsand have to be on their tenterhooks to retain the customers.

Price Sensitivity

Market is highly price conscious and promotion driven. With the onslaught of

VIDEOCONs major price cuts and promotional schemes, this market has now become a

promotion driven one. To successfully compete in this industry, even premium players

like Sony, LG have had to come up with schemes. LG and Philips have Been the most

aggressive amongst industry leaders as far as pricing is

Concerned and hence their realisation shave been lower than industry average. Industry

leaders like LG focus on low- medium priced CTV, while Samsung has Moved gradually

towards higher priced CTVs. The domestic high-end CTV prices will follow the global

price trend of declining prices. However, the Prices of domestic products would be higher

than those of global products due To negligible demand in the domestic market and hence


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most likely to be met Through imports. market is highly price sensitive as the Demand has

increased with fall in prices.

Bargaining power of supplier (low)

In television industry, there is low bargaing power of Suppliers because big global supply

chain management.there is direct negotation with supplier in order to encourge reliable

supply, faster delivery and lower price. Bargaining power influences the cost and quality

of input material. Higher supplier power raises the input cost, thereby reducing the

industry profitability. The most critical component in manufacturing television is the

picture tube. It constitutes around 50% of the cost of television. While Black and White

picture tubes are made in India, many manufacturers still need to import colour picture

tubes. The other important components include electronic circuit boards, tuners, high-

tension transformers and moulded plastic casings. The demand For colour picture tubes(CPT) has been rising steadily. But at the same time owing To customs and import

liberalisation, they had to face competition from imports During1993-1997. A sharp

reduction in import duty from 85% to 40% between 1994-96 and further down to 20% by

2004 was announced to gear the manufacturers

of picture tubes to face competition from foreign players. As a result of spurt in Demand

in 1990s, the CPT manufacturers expanded capacities, which resulted in Excess capacity

in the domestic market. Samtel Colour, LG Hotline and JCT Electronics are the major

domestic CPT manufacturers The picture tube industry is both technology and capital-

intensive industry. At the same time bulk orders in raw material procurement fetch morediscounts, which gives the larger players an advantage over their smaller counterparts. The

CPT, the most critical component in a CTV has no alternate use and therefore, the CPT

industry is solely dependent on CTV players, mainly domestic and partly exports. Hence

larger players like LG, Samsung and Mirc etc. are able to negotiate better deals unlike

other players.


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POLICIES

The consumer durable market in rural India will witness an annual growth of 40 per cent in the

next fiscal 2011-12, as against the current growth rate of 30 per cent owing to the change in

lifestyle and higher disposable income of rural India which has fascinated the consumer durable

market according to a study Rise of Consumer Durables in Rural India undertaken by theAssociated Chambers of Commerce and Industry of India (ASSOCHAM).

Around 35 per cent of the total sales of consumer durable items come from rural and semi-

urban markets, which will grow by 40 to 45 per cent in the near future. The consumer durable

industry is growing at a fast pace and sees a strong demand in the coming period with the

growing affordability of products as well as general buoyancy in the economy, said Mr. Dilip

Modi, President of ASSOCHAM.

The market for consumer durables is estimated at Rs. 300 billion and is expected to reach Rs.

500 billion by 2015. The urban consumer durables market is growing at an annual rate of nine to

12 per cent, the rural durables market is growing at 30 per cent annually. Some high-growth

categories within this segment include mobile phones, TVs (LEDs) and music systems (IPODs).

He said the rural market in is growing faster than the urban market and the urban market has now

largely become a product replacement market. The consumer durables industry in rural and semi-

urban areas has witnessed a considerable change during the last few years. The consumer

durables sector is characterized by the emergence of MNCs, exchange offers, discounts and stiff

competition in the market to attract the growing middle class of .

With being the second fastest growing economy with a rate of more than 9 per cent, with a huge

consumer class nearly 70 per cent in rural areas, consumer durables have emerged as one of the

fastest growing industries in especially in rural . Now the consumer durable industry is paying

more attention to attract rural community by promoting their products and services in their local

languages.

The consumer durable sector which contributes around 8 per cent in the Index of Industrial

Production (IIP) and which provides jobs to professionals, skilled, semi skilled and unskilled

workers, particularly women in the rural and semi-urban areas every year.


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The segment improves the quality of life of people by providing entertainment / information /

education / comfort and also helps to reduce daily chores. But the importance of the sector in

national economy remains unnoticed.

The Chamber chief further said the penetration level of consumer durables is about 5 to 7 per

cent in as compared to other countries. ASSOCHAM suggests that for deeper penetration in the

rural sector, the industry need to create proper channels and inform the community about the

products through local language advertising as well as other tools such as local exhibitions and

mobile vans to tap the rural consumers. On the other side government has to focus on rural

economy with greater fiscal incentives and generate more rural employment schemes.

According to ASSOCHAM Research Bureau, the Indian consumer durables segment can be

segregated into consumer electronics (LCDs, home theater systems, laptops & PCs etc.) and

consumer appliances (white goods) like refrigerators, washing machines, air conditioners,

microwave ovens, dishwashers and small home appliances. Television, Refrigerator and Air-

conditioner have penetration of around 25 per cent, 17 per cent & 4 per cent respectively in the

rural .

Rising disposable income and declining prices of durables have, resulted in increased volumes.

An increase in disposable income is aided by an increase in the number of both double-income

and nuclear families in .

The government is focusing on roll out of GST by 2011, this is an important consideration that is

discussed including whether GST will increase or decrease the proximity of rural markets from

mainline distribution routes. It also surfaced that the excitement that rural is causing in Indian

manufacturers and marketers represents an opportunity for domestic players to develop their

infrastructure in the rural sector.

The study revealed that in the coming five years it would be a new era for rural , by 2015 it is

expected that every village will be connected by an all weather road, every village will get the

internet connectivity and almost every home will have electricity and possess a mobile phone.

This significant improvement in rural infrastructure coupled with agriculture reforms already

under way. By this the industry expects rural market to reach at inflexion point. This built up will

lead to an explosion in demand the way it happened in the urban markets in the mid 90s.


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Intellectual PropertyRights

Protection of Intellectual property rights (IPR) is a prime requisite for development of R&D andinnovation in the consumer electronics sector. The Government of India has developed a robust

IP act to facilitate innovation, growth and development. Several amendments to the CopyrightAct, creation of a new Trademark Act, a new Designs Act and amendments to the Patents Actshow Indias continued effort to protect IPR.

The country has already made several changes in its IP acts over the years.. Several amendmentsto the Copyright Act, creation of a new Trademark Act, a new Designs Act and amendments tothe Patents Act show Indias desire to change and adapt. New acts have also been enacted tocover semiconductors and layout designs which will be of considerable importance to theelectronic industry. In the current WTO regime, India is a party to the Trade Related Aspects ofthe Intellectual Properties (TRIPs) Agreement and has accordingly, amended most of its IPRActs and Rules to conform to the said Agreement. The Indian Copyright Act 1957 was amended

in 1999; the patent Act 1970 was amended in 1999 & 2003 and Trademarks and MerchandiseMarks Act 1959 was overtaken by a new Trademark Act 1999. The Industrial Design Act 1911was effectively replaced by The Design Act 2000, and the Layout Design of Semiconductorintegrated Circuit Act 2000 was enacted. Corporate Catalyst India A report on Indian ConsumerDurables Industry The agreement on TRIPs takes care of the intellectual property rights byenforcing the patent rights, copy rights and related rights, and the protection of industrialdesigns, trade marks, geographical indications, layout designs of integrated circuits andundisclosed information. Accordingly, the member nations are asked to modify their existinglaws. Once these laws come into force, unauthorised use of the patented innovations, trademarks, etc. becomes difficult. Enforcement of the TRIPs agreement makes the production of anyproduct possible either through internal innovation or through formal transfer of technologies.

The consumer electronics and durables sector is expected to continue to benefit from supportivepolicies and become globally competitive.

Regulations

Free Trade Agreement

WTO regime which came in force in 2005, results in zero customs duty on imports of all telecomequipment. 217 IT/electronic items were covered under the Information Technology Agreement

(ITA) of the WTO for complete customs tariff elimination by 2005. Out of these 217 items,several items were already at NIL customs duty. In fact, IT/electronics was the first sector inIndia to face complete customs tariff elimination. The ITA-1 would result in intensifyingcompetition as more imported products will be easily available at lower prices.


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ForeignInvestment Policy: FDI

Foreign investment up to 100 per cent is allowed in Indian electronics industry set up exclusivelyfor exports. The units set up under these programmes are bonded factories ligible to import, freeof duty, their entire requirements of capital goods, raw materials and components, spares and

consumables, office equipment etc. Deemed export benefits are available to suppliers of thesegoods from the Domestic Tariff Area (DTA). A part of the production from such units ispermitted to be sold in the DTA depending upon the level of the value addition achieved. TheFDI approval for electrical equipment (including computer software and electronics) fromJanuary 1991 to March 2004 was US$ 7.29 billion, which was 9.94 per cent of the total foreigndirect investment (FDI) approved. During the same period the FDI inflow for electricalequipment (including computer software and electronics) was US$ 3.32 billion.

Procedure for approval

Once the investment in equity has been approved, the import of capital goods, components andraw materials or the engagement of foreign technicians for short duration does not require anyadditional approvals. Corporate Catalyst India A report on Indian Consumer Durables IndustryApproval of Ministry of Home Affairs is not needed for hiring foreign nationals holding validemployment visa. Approval for setting up units in Export Processing Zones (EPZs) is given bythe Board of Approvals in the Ministry of Commerce. Approval for setting up export-orientedunits (EOUs) outside the zones is given by the Ministry of Industry. Approvals for setting upElectronic Hardware Technology Park (EHTP) and Software Technology Park (STP) units arecleared by the Inter Ministerial Standing Committee (IMSC) set-up under the Chairmanship ofthe Secretary, Department of Information Technology. Proposals involving foreign directinvestment not covered under the automatic route are considered by the Foreign InvestmentPromotion Board (FIPB).

FDI/ ForeignTechnologyCollaboration Agreement

The government facilitates FDI and investment from Non- Resident Indians (NRIs) includingOverseas Corporate Bodies (OCBs), predominantly owned by them, to complement andsupplement domestic investment. Foreign technology induction is encouraged through FDI andforeign technology collaboration agreements. FDI and foreign technology collaborations areapproved through automatic route by the Reserve Bank of India


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OPPORTUNITIES ANDCHALLENGES

The Challenges

Heavy taxation in the country is one of the challenges for the players. At its present structure the

total tax incidence in India even now stands at around 25-30 per cent, whereas the correspondingtariffs in other Asian countries are between 7 and 17 per cent. About 65 per cent of Indianpopulation that lives in its villages still remains relevant for some consumer durables companies.This India, at least a large proportion of its constituents, still buys black and white TVs anddoesn't know what flat screens are. Also, foraying into these rural markets has a considerablecost component attached to it. Companies not only have to set up the basic infrastructure in termsof office space, manpower, but also spend on transportation for moving inventory. Even LG andSamsung, which are touted as having the largest distribution network in the country, have adirect presence only in 15,000 to 18,000 of the around 40,000 retail outlets (for consumerdurables) in the country. Poor infrastructure is another reason that seems to have held back theindustry. Regular power supply is imperative for any consumer electronics product. But that

remains a major hiccup in India.

Opportunities

The rising rate of growth of GDP, rising purchasing power of people with higher propensity toconsume with preference for sophisticated brands would provide constant impetus to growth ofwhite goods industry segment. Penetration of consumer durables would be deeper in rural Indiaif banks and financial institutions come out with liberal incentive schemes for the white goodsindustry segment, growth in disposable income, improving lifestyles, power availability, lowrunning cost, and rise in temperatures. While the consumer durables market is facing a slowdowndue to saturation in the urban market, rural consumers should be provided with easily payableconsumer finance schemes and basic services, after sales services to suit the infrastructure andthe existing amenities like electricity, voltage etc. Currently, rural consumers purchase theirdurables from the nearest towns, leading to increased expenses due to transportation. Purchasenecessarily done only during the harvest, festive and wedding seasons April to June andOctober to November in North India and October to February in the South, believed to bemonths `good for buying, should be converted to routine regular feature from the seasonalcharacter. Corporate Catalyst India A report on Indian Consumer Durables Industry Rural India


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Companies Overview

OVER

VIEW of

Videocon Company

Videocon Industries Ltd. was one of the initials

company that made it to the World. Videocon

Electricals captured the initial Indian Electrical

market and topped the charts for its products such

as Refrigerators, television etc. before other

players such as Samsung, Whirlpool etc .enteredIndian market. Videocon was one of the first

Electronic Company to Collaborate with Japanese

Toshiba Ltd as early as 1985.

Backgroundy Founded : 1987y Founders : Nandlal Madhavlal Dhooty Headquarters : Aurangabad ( Maharastra )y Area served : Consumer Electronics

Home ApplianceComponentsOffice AutomationInternetPetroleum

Powery Industry : Consumer Durables, Oil and Gas etc.y Share Type : Ordinaryy Revenue : US$4.1 billion (2008)y Net Income : US$276 million (2008)y Web site : www.videoconworld.com


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History of Videocon

Videocon Leasing & Industrial Finance Limited, was incorporated on 4th September, 1986 as AdhigamTrading Private Limited. In terms of the necessary resolutions passed under Sec. 21 of the CompaniesAct, 1956, the name of the Company was changed to Videocon Leasing & Industrial Finance Limited on

14th February, 1991. The Company received a fresh certificate of incorporation from the Registrar ofCompanies, Gujarat at Ahmedabad on 14th February, 1991.

Adhigam Trading Pvt. Ltd. (ATPL) was promoted by M Indrakant T. Parikh and Naishad I. Parikh inSeptember 1986 as a private limited company and was initially engaged in the business of trading inpaper tubes. In September, 1988 the Company decided to diversify in the business of lease financing,hire purchase and investment activities.

The Management of the Company underwent a change in the year 1990-91 by way of transfer of equityshares to the Videocon Group. 1,00,000 Equity Shares of Rs. 10/- each of Adhigam Trading PrivateLimited were purchased by the Videocon Group at a premium of Rs. 3/- per share in April, 1991. Thetotal consideration of Rs. 13 Lakhs was paid bycheques.


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Corporate Profile

The Videocon group emerges as a USD 2.5 Billion global

conglomeratecontinuing to set trends in every sphere of its activities from a

conference room sized assembly line in 1979. It started life in

1984 as a branded manufacturer of consumer durables. In 1995, it

ventured in to contract manufacturing and then oil. The consumer

electronics and oil businesses were separate entities with

separate balance sheets. Things changed in 2005 when Videocon

merged its oil subsidiary, petrocon, in to the flagship VIL

(Videocon Industries Limited). Now it has a balance sheet that has

the combined number both consumer electronics as well as oil. It

is clear that this was primarily done to use oil revenues to shore

up the sagging consumer electronics business. Nevertheless, it is

unusual. This move has raised questions about whether Videocon is

trying out too many things. An indication of market sentiment can

be got from the fact that its market cap of Rs 9,855 crores is

less than even its estimated sales (put out by domestic

brokerages) of Rs 11,444 crores in FY06 (it has an October-

September financial calendar). One of the worlds largest andmost acknowledged CPT manufacturer in the world, the group is

forging ahead with production and development of latest

technologies like Super True Flat CPT, Slim CPT, Extra Slim CPT

and HD 16:9 format CPT.


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Vision & Mission

Videocons mission: a reflection of continuity and changeVideocons mission expression has been crafted to envelope both extant and emerginrealities:

To delight and deliver beyond expectation through ingenious strategy, intrepentrepreneurship, improved technology, innovative products, insightful marketing and inspirthinking about the future.

A breakdown of the statement above reveals a means and end approach, where the endarticulated at the beginning with the means linked to it.

To delight and deliver beyond expectation: the endThis segment not only underlines the importance of the ultimate goal - customer satisfacti(delight) and ultimate target - the customer, but also of intermediate processes and principawhich have contributed to building a robust, dependable Videocon value chain (deliver). Asresult of its focus on developing loyal customers and reliable associates, Videocon is able exceed expectations.

through ingenious strategy: the means

In the cutthroat world of today, it is only by taking recourse to advance planning and strategy th

a business can hope to survive. Although textbook strategy has its uses, reproducing it verbatim for the real world would be foolish because of the absence of textbook conditionThus, there is a need for a bounded rationality, a spontaneity and improvisation that is flexibenough for scenarios both imaginable and unimaginable. Videocons ingenious manoeuvres aactually flexi-strategy that abstracts from shifting ground conditions and decides game-plans, sometimes changes the rules of the game.

intrepid entrepreneurship: the means

An enterprise with the odds stacked against it makes great business sense. This is becauhigher the obstacles, lower the number of players likely to be active in that field - thus, fetchiextraordinary returns. The only requirement is a bold and confident attitude willing to brave t

odds. Videocons foray into oil and gas is a bold and intrepid endeavour that arises froimmense faith on the surefooted competence of the companys in-house managerial talent.

improved technology: the means

Technology is no more a premium input; it has become the bare minimum in recent years. Rapadvances have only fuelled this phenomenon. Videocon is extremely vigilant in shunting o


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dated technology and replacing it with the best-in-class offers of the times.

innovative products: the means

Product development, innovation and customisation are the tools Videocon uses to stay ahe

of the competition. This is because a continuous stream of innovative products excites tmarket and enhances brand recall. A strategy that Videocon banks on a lot, especially on tdomestic front.

insightful marketing: the means

The market share battle scene has long shifted from technology and processes to the psyche the customer. This means that those with deeper insights into the elusive mind of the buyer alikely to dominate. Videocon is reinforcing marketing strengths to read better the pulse of tmarket and help create products that map perfectly into customer preferences.

inspired thinking about the future.: the means

The future is unpredictable, but not doing anything about it is fraught with grave risk. Videocextrapolates future trends on the basis of current changes in technology and preferences as was sheer gut feel. Fine-tuned business instincts are worth their weight in gold, lots of it. Tcompany has perfected its practice almost into an art form with some calculated gambles like and gas proving to be absolute money-spinners.


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Values & Philosophy

Shri Nandlal Madhavlal Dhoot, the founder of the Videocon Group, completed his education Ahmednagar and Pune. He was a successful sugarcane and cotton cultivator. As a next logical step vertical integration, he boldly took upon an entrepreneurial venture by importing machinery from Euroto set up the Gangapur Sakhar Karkhana (Sugar Mill) in 1955. Those were the times when the village dnot even have electricity. Thus was unleashed an Industrial Revolutio

The die was cast. Over the years, Nandlalji's path-breaking attitude found expression in a myriad wayearning him the well-deserved reputation of the pioneer of industrial activity in Marathwada India.

In early 80's Nandlalji initiated his three sons - Venugopal, Rajkumar and Pradeep into busines

Through a technical tie up with Toshiba Corporation of Japan, he launched India's first world-class coloTelevision: Videocon. Today, Videocon is household name across the nation- India's No. 1 brand Consumer Electronics & Home Appliances, trusted by over 50 million people to improve their quality life.


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Customer, Corporate and Videocon

Corporate Overview

The Videocon Group is committed to create a bette

quality of life for people and furthering the interest

of society, by being a responsible corporate citizen.

Creating Happiness

We will bring happiness into every home, offering hig

quality consumer durables at affordable prices

spreading the culture of convenience, entertainment an

comfort, far and wide.

Achieving Progress

We will pursue innovative technologies in the fields o

Electronics and Energy, create products and service

that will improve the quality of life, realize the goal

of the world community and protect the environment.

Sustaining Growth

We will be a source of pride to our business associate

by ensuring mutual prosperity and growth through th

implementation of forward-looking corporate strategies


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aimed at identifying opportunities and respondin

intelligently to the dynamics of change.

Pursuing Excellence

We will provide a conducive environment for enabling ou

employees to develop their potential and make

significant contribution to the Group's success. I

1985, through a technical tie-up with Toshib

Corporation of Japan, Videocon International Limite

launched India's first world class Color

Television. Today, Videocon International Ltd., th

flagship company of the Videocon Group, is India'

leading manufacturer of Consumer Electronic products

Fired by a passion for innovation, Videocon has kep

pace with the changing face of technology, constantl

upgrading its manufacturing facilities to incorporatadvanced technology and high standards of quality int

its product range, right across the spectrum.


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AMBITIONS and TECHNOLOGIES

Technology with a Heart

Committed to giving the consumer the best the world ha

to offer, Videocon has developed near zero wastag

technology which helps reduce manufacturing costs b

optimizing material

inputs. Coupled with quality-consciousness at ever

stage, the consumer benefits enormously by gettinpremium products at affordable prices. The compan

currently manufactures Colour TVs, Black & White TVs an

Audio products. At its modern plant at Chitegaon an

Aurangabad, the Company has also undertaken complet

backward integration to manufacture all critical an

important components of its products, such as Electroni

Tuners, FBTs, ATDMs and Deflection Yokes, thereb

reducing costs, ensuring quality control and becomin

vertically integrated. It has set up a unit a

Gandhinagar in Gujarat for manufacturing Black & Whit

TV picture Tubes.

The Sound of ExcellenceVideocon produces a sophisticated range of Home Audi

Systems, Stereo Radio, Recorders and Personal Stereos

as well as the contemporary international range o

Kenwood Digital Hi Fi Systems.


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First with the Best

Continuous upgradation and indigenous manufacturing ha

been and continues to be an integral part of thcompany's philosophy. Perceived as an innovator in it

field, Videocon has notched up many exciting firsts, b

exploring the world's most advanced technologies. I

Colour TVs, Videocon was the first Indian Company t

introduce Picture-In- Picture, Turbo Sound, Surroun

Sound, Larger Screen Sizes, the Full Flat Square Tube

Bazooka technology and the Freedom series : affordabl

high quality range of Colour TVs for the price-consciou

consumer.

Global Ambition

Looking beyond India, Videocon is now a global playeracknowledged by the world. It is the first India

company to win the prestigious CE approval for exportin

its Colour TV to Europe. Videocon is now entering worl

market with its operations in the Middle East, Europe

Indonesia and South Africa. Videocon Narmada Glas

(VNG): a division of Videocon International Ltd., ha

the distinction of having set up India's first plant fothe manufacture of Glass Shells for Color Televisio

Picture Tubes, in technical collaboration wit

Techneglas Inc., USA (formerly known as OINEG T


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Products Inc., USA), world leader in Glass Shel

Technology. The projects in 1990, when the then Prim

Minister of India, the late Shri Rajiv Gandhi, laid th

foundation stone for the project. The Videocon Groupwith the objective of backward integration, joined hand

with Gujarat Narmada Valley Fertilizers Co. Ltd., (GNFC

for the implementation of this 100% import substitutio

project, the largest investment (Rs. 450 crores) i

electronic component industry in the country. The plant

with an installed annual capacity of 1.7 million GlasShells for Color Picture Tubes and 0.25 million glas

Bulbs for Black & white Picture Tubes and Monochrom

Monitor Tubes, is located at Village Chavai, Distric

Bharuch, Gujarat.

SUCCESS STORIES

The Heights of Success

VNG has some remarkable achievements to its credit

starting with the successful absorption of sophisticate

technology from Techneglas Inc., USA. The CTV Glas

Shells manufactured by VNG are at par with internationa

standards and the Color Picture Tubes made with VNglass have already received VDE approval. The facilitie

include a state-of-the-art Tool Room and Mould Shop t

manufacture and maintain its mould requirements. Havin


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initially successfully established its 20V, 19V and 13

CTV glass parts, VNG has now developed the 20V 2R th

latest models.

A Picture Perfect Future

Till 1994, Indian manufacturers of CTV Picture Tube

were importing Glass Shells. VNG's production ha

replaced these imports, thereby saving almost Rs.20

crores of precious foreign exchange every year. VNG ha

now surpassed the norms of performance guaranteed by th

collaborator, Techneglas Inc., U.S.A. and is operatin

the plant with 150% capacity utilization - wit

efficiencies exceeding international standards. Wher

fields of sugarcane grow tall and proud. Where bushes o

cotton bud blooms. Where tourists flock to the world

famous caves of Ajanta and Ellora. Where India's NO.Consumer Electronics and Home Appliances take shape, t

take millions of Indians into a better, brighter future

This is Marathwada, India, where the Dhoot famil

launched Videocon International Limited in 1984, wit

the avowed purpose of producing world-class Colou

Television through a technical tie-up with Toshib

Corporation of Japan. Within a decade, Videocon emerge

as India's leading brand of both Colour and Black

White Televisions and continues to dominate this highl

competitive market. The leader innovates. The leade


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forges ahead. The leader breaks new ground. Harnessin

the advanced technology, relentlessly pursuing qualit

to achieve various international standards of Qualit

Control. Breaking through, time and again, witinnovative products for a better life.

VISIONARY VIDEOCON

Profiles ofLeadership

Futuristic Neuro Fuzzy Logic Washing Machines, User

friendly - No-Frost Refrigerators, the very latest musi

systems. The most sophisticated Colour Television an

VCRs. High-Tech Air-conditioners. Videocon today, is

multi-faceted group, with 9 state -of-the-ar

manufacturing facilities all over India. Highl

qualified engineers, trained in Japan, backed by 650

technical and support staff, work together in clos

unison to produce India's leading branch of consume

electronic products and home appliances.

Leadership through People

Videocon lays great emphasis on the training an

development of its work force, providing ever

opportunity for growth and advancement, includin

training stints overseas.


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LANDMARKS

FROM ELECTRONICS TO ENERGY

The Heart of Nation

1995 was a landmark year for Videocon. It clearl

reaffirmed its leadership in Color TVs, Black & Whit

TVs, VCRs and VCPs, Washing Machines as well as No-Fros

Refrigerators. Then Videocon began to reach out to th

core. To industries at the heart of a nation: PetroleumPower, Construction and Housing. Leading India into th

future, with Confidence, with determination, with

commitment to excellence, rooted in the pioneerin

vision of a path breaker.

Consumer Electronics, Home Appliances & Compressor manufacturing inIndia

Videocon enjoys a pre-eminent position in terms of sales and custome

satisfaction in many of our consumer products like Color Televisions

Washing Machines, Air Conditioners, Refrigerators, Microwave ovens an

many other home appliances, selling them through a Multi-Brand strateg

with the largest sales and service network in India. Refrigeratomanufacturing is further supported by our in-house compresso

manufacturing technology in Bangalore. Videocon has the larges

distributed manufacturing base across India 12 facilities. It has th

Capacity to manufacture 4 million CTVs, 2.5 lacs washing machines, 1 mn

DVD players, 4.8 mn refrigerators.


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Display industry and its components

With the Thomson acquisition Videocon has emerged as one of the largest

Color Picture tube manufacturers in the world operating in Mexico

Italy, Poland and China, continuing to lead through new innovativtechnologies like slim CPT, extra slim CPT and High Definition 16

format CPT.

Color Picture Tube Glass

Videocon is one of the largest CPT Glass manufacturers in the world wit

a high level of experience and technical expertise operating throug

Poland and India. Videocon will leverage on this synergy after th

Thomson acquisition to internally source glass for its CPT manufacturin

increasing efficiencies and lowering costs.

Oil and Gas

An important asset for the group is its Ravva oil field with one of th

lowest operating costs in the world producing 50,000 barrels of oil pe

day. The group has ambitious plans for expansion in this secto

globally.

LOGOLOGIC

This is the new Videocon symbol. It reiterates the ethos of a compan

dedicated to maintaining the highest international standards o

excellence through quality, technology and innovation. For over a decad

now, Videocon has been bringing the latest and very best in ConsumeElectronics and Home Appliances. Successfully adapting the best o

international technology to suit Indian needs, and crafting it t

improve the quality of life as million of satisfied customers wil

agree.


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The new symbol of Videocon asserts its passion for global impact, an

the two Es on either side represent the Groups wide spectrum ointerests ranging from Electronics to Energy. Along with the steel

glint, this communicates the group's global ambition, its strength

sterling credentials and innovative drive. A symbol that proclaims

paradigm shift. A sign that represents the new force that is Videocon

Thus recapitulating our principle of reaching out and touching the live

of millions of people Worldwide.


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Research & DevelopmentThe Company gives utmost importance to R & D activities, which are carried out, at in-house & D center. The Company carries on new innovations in product development, cost reductionquality improvement, process implementation, process controls.

1) Specific areas in which R & D is carried out by the Company

During the year, the Company has carried out Research and Development in thfollowing areas:

1. Home theaters - High-end models and HTIB Models.2. Larger Screen Television i.e. 32 inch and 38inch.3. True Flat Televisions.4. LCD TVs.5. Plasma Televisions.6. Cosmetic design and new out look to the TVs.7. Manufacturing of components for CTV, Refrigerators and Air conditioners.8. Developed high-end products to be offered to Indian market.9. Efforts to reduce power consumption of all its final products.10. Development of products suitable for Indian climate conditions, as well as same fo

export market.11. Introduction of TV with immense picture performance and razor slim design.

2) Benefits derived as a result of the above R & D The Company has derived thfollowing benefits as a result of Research and Development:

1. Developed new design in products and launched various new models.2. Developed high-end products to be offered to Indian market.3. Introduced Integrated Digital TV (iDTV) with a built-in digital decoder having MPEG

DVB-S2 Digital signal; Introduced LED TV with "Nano Pixels" for immense picturperformance and Razor slim design; Introduced Unique "SMART TV", which set platform for "Internet TV" to enjoy the Live Chatting, Browsing, Video conferencinemail access, Blu Tooth connectivity etc.; and various other ranges/series of LCD Twith Full HD 1080p resolution.

4. Introduced Star Rated Products in Consumer Electronics and Home appliances. Withis technology, the customer can have benefit of saving approximately 15% of powe

consumption, resulting into effective utilization of power resources in the nation.5. Introduced paint less product with a unique Hot and Cold Technology for moulding

parts. This helps to reduce pollution generated due to hazardous chemicals used plastic paints and its process. Customer can enjoy the high glossy finish with ultimatscratch resistance.

6. Developed new ranges of Direct Cool as well as Frost Free refrigerators like EcocooEcocool Plus, Ecofresh, Deofresh, Nutricool, Nutricool Plus, Powercool. Developed 4


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5 Star rated refrigerators with new exterior finish i.e. PCM-Pre-coated material.7. Introduced new base stand with smart VEGI TRAY, which is unique and giv

convenience to customer in day to day usage.8. Introduced new economic series of Direct cool refrigerator as "Bharat series", to cater t

each and every Indian family. This has given cutting edge solution for the competitors o

the price factor.9. Introduction of the products on health platform with Deodorizer, which gives the solutio

to remove the odour created by rotten vegetables and fruits.10. Enhanced Frost Free refrigerator series with introduction of LED & LEDi technology.11. Increase in Productivity.

3)Future Plan of ActionIn the coming days Company is aiming to achieve development in the following througResearch and Development areas:

1. Manufacturing of components for consumer Electronics Products.2. Various models of Multimedia TV; iDTV; LCDTVs; LED & LEDi3. Plasma Televisions.4. Composite Home Entertainment system with internet adaptability.5. Better features, better quality & improved reliability with reduced/low prices.

The Company always attempts to use the latest and advanced technology in productioprocess. Keeping pace with the technological developments, the company keeps on addinsophisticated equipments with focus on automation to minimize manual intervention in thmanufacturing process thereby ensuring quality of the final products.


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VIDEOCON'S STRATEGIES

Multi-brand strategy

Videocon International was the first Indian company to adopt the

strategy of multi-brands. Apart from its mid-priced brand

Videocon, the company now hawks Toshiba, a premium brand, and the

low-priced brands Akai and Sansui.

The multi branding technology paid off as Videocon managed to hold

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

25.9 percent and Samsung at around 13.8 percent.

Overall, the shift in the power to trade is probably one of the

defining developments. It is important since the TV companies

themselves have taken it seriously and embarked on crafting

longer-term strategies to accommodate this development. The

effectiveness of their strategy and the responses of the other

players promise to deliver a few more years of enterprising

developments in the Indian TV market.

Backward Integration

Videocon integrated backwards by getting into manufacture of

components such as electron guns, metal parts and deflection yokes

for CTVs and compressors, and electric motors and plastic

components for households appliances such as washing machines,

refrigerators and Air conditioners. The group integrated further

to get in to manufacture of glass panels and funnels, the keycomponents for the manufacture of color picture tubes. Videocon

enjoys a unique synergy in the global CTV business from glass to

CRT (Cathode Ray tubes) to CTVs. - (From Sand to CTV). Together

with other components for households appliances. This high degree


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of backward integration bestows upon the company a unique benefit

over competition.

SEGMENTATION, TARGETING & POSITIONING(STP)

SEGMENTATION:

Market segmentation is the process in marketing of dividing a

market into distinct subsets (segments) that behave in the sameway or have similar needs.

Because each segment is fairly homogeneous in their needs and

attitudes, they are likely to respond similarly to a given

marketing strategy. They are likely to have similar feelings and

ideas about a marketing mix comprised of a given product or

service, sold at a given price, distributed in a certain way and

promoted in a certain way.

The process of segmentation is distinct from targeting (choosing

which

segments to address) and positioning (designing an appropriate

marketing mix for each segment). The overall intent is to identify

groups of similar customers and potential customers; to prioritize

the groups to address; to understand their behavior; and to

respond with appropriate marketing strategies that satisfy the

different preferences of each chosen segment.

Segments based on Income

Plasma: Income group of more than 50,000

LCD: Income bracket of Rs 20,000 and above

Slim: Consumer in the income bracket of Rs 9000-15000

Flat: Consumer in the income bracket of 7000-12000


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Conventional: income bracket of Rs 3000-6000

Segments based on social class

Plasma: rich classLCD: upper middle class and rich class

Slim: middle class

Flat: middle and lower middle class

Conventional: lower economic class.

Benefit Segmentation:

Conventional, Flat screen Slim, LCD, and Plasma can also segmented

on the basis of benefits that an end consumer would receive from

them.

User Status:

TV market can be classified into non users of TV and potential

users in term of graduating to a higher segment like slim,LCD,Plasma from basic conventional TV

Loyalty status: On the basis of Loyalty status Hardcore Loyal: brand

loyal to Videocon for a long time in terms of purchasing products

of Videocon

Shifting Loyal: who shift loyalty from other brands to another

Switchers: not loyal to any brands so attract them to Videocon and

convert they brand loyal.

TARGETING:

Once the firm has identified its marketing-segment opportunities,

it has to


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decide how many and which ones to target. Marketers are

increasingly combining several variables in an effort to identify

smaller, better-defined target groups.

The decisions involved in targeting strategy include:

* Which segments to target?* How many products to offer

* Which products to offer in which segments

In premium segments like flat screens and FDPs the growth in sales

has been many times the industry growth. More importantly, high

end product sales are no longer restricted to metros. Consumer in

tier-2 cities seems to be as evolved in lifestyle needs. The

consumer profile, too, has changed. Higher disposable incomes,

greater aspirations and younger demographic have increased demands

for the technologies. And Videocon is targeting this segment.

POSITIONING:

Positioning has come to mean the process by which marketers try to

create an image or identity in the minds of their target marketfor its product, brand, or organization. It is the 'relative

competitive comparison' their product occupies in a given market

as perceived by the target market.

Once the competitive frame of reference for positioning has been

fixed by

defining the customer target market and nature of competition,

marketers can define the appropriate points-of-difference and

points-of parity associations.

Points of Parity (POPs) are associations that are not necessarily

unique to the brand but may infact be shared with other brands.

They represent necessary-but not necessarily sufficient-conditions


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for brand choice. Videocon's Points-of-Parity are good quality

Picture and good sound.

Points-of-Difference (PODs) are attributes or benefits consumers

stronglyassociates with a brand, positively evaluate, and believe that

they could not find to the same extent with a competitive brand.

Videocon's POD is the quality product with low cost. With the

strong backward integration Videocon can provide the products with

low cost.

Thus, Videocon is positioned itself as a reliable and value-for-money

product.


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4PsThe 4Ps includes the Product, Price, Place and promotion.

Product Mix

Product mix is the set of all product and items a particular

seller offers for sale.

Product mix consists of various product lines.

The width of a product mix refers to how many different product

lines the

company carries. The Videocon television has product mix width of

five lines.

I.e. plasma, LCD, Slim, flat and Conventional.

The length of a product mix refers to the total number of items in

the mix.

I.e. for the line of LCD the length is 2 as it has two items 50

PDP and 42 PDP. The depth of the product mix refers to how manyvariants are offered of each product in the line.i.e. For LCD the

depth will be 2. As Videocon is offering only one product in 50

PDP and 42 PDP. The three product-mix dimensions permit the

company to expand its business in three ways.

It can add new product lines, thus widening its product mix.

It can lengthen each product lines.

It can add more product variants to each product and deepen itsproduct mix.

Width, Length & DepthWidth = 5 (Plasma, LCD, Slim, Flat, Conventional)


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In the product mix of Videocon, it is having 37 different models,

which gives

them their product line Depth.

PLASMA

Plasma television technology is similar to the technology used in

a fluorescent light bulb. The display itself consists of cells.

Within each cell two glass panels

Plasma LCD Slim Flat Conventional

50PDP 42 LCD 29 slim 29 flat 21 FFST

42PDP 32 LCD 21 slim 21 flat 20 conv

26 LCD 15 flat 14 conv

20 LCD

19 LCD

Length

2 5 2 3 3

are separated by a narrow gap in which neon-xenon gas is injected

and sealed in plasma form during the manufacturing process. The

main advantage of Plasma over CRT technology is that, by utilizing

a sealed cell with charged plasma for each pixel, the need for a

scanning electron beam in eliminated, which, in turn, eliminatesthe need for a large Cathode Ray Tube to produce video images.

This is why traditional televisions are shaped more like boxes and

Plasma televisions are thin and flat.

Advantages ofPlasma Television:


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Largest Screen Formats.

Superior Contrasts.

Versatile.

Capable Of Displaying Full HDTV & Dtv Signal.

Capable Of Displaying Xga, Svga & Vga Pc Signal.Wide Viewing Angle.

Wide Rage Of Richer Color Over 16 Million.

Superb Realistic Images.

Less Expensive Than Lcds.

Life More Than 30,000 Hours.

Wide Screen Aspect Ratio around 16:9.

Perfect Flat Screen.

Uniform Screen Brightness.

Slim & Space Saving Design.

50" PDP

Integra 50

10000:1 Contrast Ratio

3:2 & 2:2 Pull Down

HDMI Compatible

3-D Video Noise Reduction

PC Input

42" PDP

16.77 Million Color

10000:1 Contrast Ratio

3.2 & 2:2 Pull Down20

1500cd/m2 Brightness


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HDMI Compatible

3-D Video Noise Reduction

LCD

The flabs are out and now technology has switched over to sleek

and slim products, LCD being the prominent amongst them. LCD

technology is the recent breakthrough in consumer electronics and

because of its esteemed advantages this segment is growing day by

day. Videocon are launching this range under the sub brand

Integra. INTEGRA term indicates the integration of various

systems connectivity with LCDTV. This is an integration of best

sound quality and excellent picture quality.

What is TFT-LCD?

Meaning of this term is Thin Film TransistorLiquid Crystal

Display. TFT technology used in this category offers the best

image quality in flat panels. This technology is also called as

Active Matrix Technology.

40"LCD

32"LCD26"LCD20"LCD19"LCD

Slim


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With Continuous Research & Development Videocon brings a

revolutionary advancement in physics & brings new Slim & Trim

Television. The Most significant feature of the Slim & Trim

Television is its one kind of super slim picture tube technology.

This has enables us to make the TV 42%Slimmer. Slim Picture tube is a product with reduced depth

providing the TV and monitor producers with opportunity to design

Slim, flat and stylish TVs comparable to plasma or LCD panels

maintaining Good picture Quality

29" SLIM

21" SLIM

Flat

Videocon Bada Woofer with Surrounds Bass Technology Bass

Amplification by Dynamic Alignment (BADA) woofer is a

revolutionary technology that offers a new sound to create an

unbelievable sound space Videocon unique Bazoomba Woofer

Technology Videocon's superior Bazoomba Woofer Technology

incorporates a unique conjugate arrangement of Woofer motors that

ensures rich bass reproduction. The Bazoomba Woofer Technology

Enables the generation of the lowest bass frequencies from a small

enclosure (Bazoomba tube). Enables cleaner and tighter bass


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reproduction due to acoustic cancellation of distortion in the

even harmonics

29" TFT21" TFT15" TFT

Conventional TV

21" FFST

20" CONV

14" CONV

PricingThe pricing of the Videocons various models is as following.

Plasma TV : Rs. 59,990 - 2, 40,000

LCD TV : Rs. 28,400 89,900

Slim TV : Rs. 10,400 18,900

Flat TV : Rs. 5,500 18,400

Conventional TV : Rs. 4,600 - 9,500


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Place

Videocon has its presence all throughout India. They have their

presence in 25 states and each state has at least 2 divisions per

state. In total they are having 78 divisions. Videocon has around

1800 dealers in India. They are having 96 service centers across

India.

Promotional Activities

Focusing on LCD, Plasma and 29 Flat TVs since 2006. Byinstitutional selling. Company used both TVC as well as print

media for promotion. The company is using outdoor media promotions

in hording and bus shelters to high light the feature packed

advantages. Major tie ups in the background IIT alumni/ Videocon

Santos ham film awards 2006 with ZEE and ICC Cricket champions

trophy.


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Products

LED TV LCD TV

Ultra slim TV Flat TV

Conventional TV


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Frost Free Refrigerators Direct Cool Refrigerators

Solo

Grill

Convection


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Products & Services :-

Videocon served in many area like consumer product, home product, oil &gas etc.

Following are the important product produced by videoconcompany.

y CONSUMER ELECTRONICS

1. Plasma TV2. LCD TV3. 34 TV4. Slim TV5. Sound Station6. Flat TV7. Conventional TV8. DVD9. Multimedia Speakers

y HOME APPLIANCES

1. Frost Free Refrigerators2. Direct Cool Refrigerators

3. Side by Side Refrigerators4. Fully Automatic Washing Machines5. Semi Automatic Washing Machines6. Microwave Ovens7. Window AC8. Split AC9. Cassette AC10.Tower AC


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STRATEGIC BUSINESS UNIT ( SBU)

An SBU, in the strategic management sense, is normally an entire division inlarge corporations or one of the firms of a diversified company that carries out a

certain business - in one of the business sectors the firm operates. This approachentails the creation of SBU's to address each market in which the company isoperating.

y SBU OFVIDEOCON COMPANY


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In BCG Matrix product or business unit are identified as Stars, Cash Cow, Dogs,Question mark. BCG Matrix can used for resource allocation. The matrix can beexplained are as follows.

y

Stars (high growth, high market share)y

Stars are using large amounts of cash. Stars are leaders in the business.Therefore they should also generate large amounts of cash.

Stars are frequently roughly in balance on net cash flow. However if neededany attempt should be made to hold your market share in Stars, because therewards will be Cash Cows if market share is kept.

Cash Cows (low growth, high market share) Profits and cash generation should be high. Because of the low growth,investments which are needed should be low.

Cash Cows are often the stars of yesterday and they are the foundation of acompany.

Dogs (low growth, low market share)Avoid and minimize the number ofDogs in a company.Watch out for expensive rescue plans.Dogs must deliver cash, otherwise they must be liquidated.Question Marks (high growth, low market share)Question Marks have the worst cash characteristics of all, because they havehigh cash demands and generate low returns, because of their low market share.

If the market share remains unchanged, Question Marks will simply absorbgreat amounts of cash.

Either invest heavily, or sell off, or invest nothing and generate any cash thatyou can. Increase market share or deliver cash.

BCG MATRIXOFVIDEOCON COMPANY


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SWOT ANALYSIS OFVIDEOCON COMPANY


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Financial Analysis of Videocon Company


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Balance sheet

Sep ' 09 Sep ' 08 Sep ' 07 Sep ' 06 Sep ' 05

Sources of funds

Owner's fund

Equity share capital 229.41 229.30 220.95 220.84 206.53

Share application money 95.00 - - - 65.24

Preference share capital 46.01 46.01 46.01 46.01 -

Reserves & surplus 6,929.63 6,538.49 5,357.91 3,847.63 3,420.56

Loan funds

Secured loans 6,735.04 4,401.25 3,343.50 3,608.39 2,776.10

Unsecured loans 2,349.51 3,604.34 1,916.14 1,352.80 473.47

Total 16,384.59 14,819.39 10,884.50 9,075.67 6,941.90

Uses of funds

Fixed assets

Gross block 9,004.95 8,947.78 8,083.16 7,127.93 5,578.62

Less : revaluation reserve - - 53.52 924.57 951.84

Less : accumulated depreciation 4,298.83 4,310.63 3,376.67 2,847.09 2,286.77

Net block 4,706.12 4,637.15 4,652.98 3,356.27 2,340.00

Capital work-in-progress 1,314.15 1,289.52 612.98 608.28 699.23

Investments 3,064.90 2,695.59 2,092.50 1,781.17 338.79

Net current assets

Current assets, loans & advances 8,820.90 7,641.68 5,142.49 4,425.46 4,449.32


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Less : current liabilities & provisions 1,521.48 1,444.55 1,616.44 1,095.51 885.44

Total net current assets 7,299.42 6,197.13 3,526.05 3,329.96 3,563.88

Miscellaneous expenses not written - - - - -

Total 16,384.59 14,819.39 10,884.50 9,075.67 6,941.90

Notes:

Book value of unquoted investments 3,056.96 2,524.79 1,906.24 1,618.68 321.18

Market value of quoted investments 10.83 214.72 230.38 94.13 51.79

Contingent liabilities 122.93 178.17 112.59 81.65 207.72

Number of equity sharesoutstanding (Lacs) 2294.07 2294.51 2210.94 2209.86 2065.26

Cash flow


Profit before tax 578.34 1,294.78 1,082.90 913.67 451.83


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Net cashflow-operating activity 647.41 -1,193.44 1,133.68 1,351.72 -1,792.99

Net cash used in investing activity -1,018.71 -1,909.68 -1,268.50 -2,843.94 -4,492.92

Netcash used in fin. activity 481.53 2,602.30 -112.33 1,232.47 7,681.64

Net inc/dec in cash and equivlnt 110.22 -500.82 -247.15 -259.76 1,395.73

Cash and equivalnt begin of year 388.28 889.11 1,136.26 1,396.01 0.28

Cash and equivalnt end of year 498.51 388.28 889.11 1,136.25 1,396.01

Profit loss accountSep ' 09 Sep ' 08 Sep ' 07 Sep ' 06 Sep ' 05

Income

Operating income 9,163.04 9,753.65 8,285.42 7,218.82 5,460.25

Expenses

Material consumed 5,614.40 5,291.05 4,954.79 4,162.74 3,070.27

Manufacturing expenses 773.74 1,285.85 988.23 986.28 916.22

Personnel expenses 126.42 115.82 105.35 94.70 49.53

Selling expenses 550.04 505.07 470.62 412.12 360.47

Adminstrative expenses 224.47 163.62 94.21 222.71 207.96

Expenses capitalised - - - - -

Cost of sales 7,289.07 7,361.40 6,613.19 5,878.56 4,604.44

Operating profit 1,873.97 2,392.25 1,672.24 1,340.26 855.81

Other recurring income 27.39 71.92 71.55 127.21 35.66


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Adjusted PBDIT 1,901.37 2,464.18 1,743.79 1,467.47 891.47

Financial expenses 665.75 431.86 337.17 254.75 244.96

Depreciation 577.15 660.21 418.39 484.00 320.15

Other write offs - - - - -

Adjusted PBT 658.46 1,372.11 988.23 728.72 326.36

Tax charges 177.68 312.67 227.68 95.16 -166.03

Adjusted PAT 480.78 1,059.43 760.55 633.56 492.40

Non recurring items -80.12 -205.14 94.67 -139.82 -152.50

Other non cash adjustments 73.68 0.72 3.54 0.30 2.36

Reported net profit 474.34 855.01 858.76 494.04 342.26

Earnigs before appropriation 2,536.34 2,306.65 1,696.84 932.95 602.36

Equity dividend 46.25 22.95 80.30 77.35 55.19

Preference dividend 3.68 3.68 3.68 3.39 2.50

Dividend tax 8.49 4.53 14.27 11.32 8.09

Retained earnings 2,477.92 2,275.49 1,598.59 840.89 536.58

Samsung

Overview


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Samsung Electronics is the world's largest electronics company with a 2009 revenue of $117.4

billion, headquartered in Samsung Town, Seoul, South Korea. It is the flagship subsidiary of the

Samsung Group. With assembly plants and sales networks in 65 countries across the world, Samsung

has as many as 157,000 employees.In 2009, the company took the position of the worlds biggest IT

maker by surpassing the erstwhile leader Hewlett-Packard. Its sales revenue in the areas of LCD and

LED displays and computer chips is the worlds No. 1.

Some of the most popular items produced by Samsung include LED-backlit LCD TVs and Galaxy S

mobile phones. Even though consumers may not realize, many non-Samsung-brand devices such as TVs

and phones have Samsung-manufactured memory components inside.

In the TV segment, Samsungs market position is dominant. For the four years since 2006, the company

has been in the top spot in terms of the number of TVs sold, which is expected to continue in 2010 and

beyond. In the global LCD panel market, the company has kept the leading position for eight years in a

row.

With the Galaxy S model, Samsungs smartphone lineup has retained the second-best slot in the world

market for some time. In competition to Apple's iPad tablet, Samsung released the Android powered

Samsung Galaxy Tablet.

History

Samsung Electronics was founded in 1969 in Daegu, South Korea as Samsung Electric Industries,

originally manufacturing electronic appliances such as TVs, calculators, refrigerators, air conditioners and


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washers. By 1981, the company had manufactured over 10 million black and white TVs. In 1988, it

merged with Samsung Semiconductor & Communications.

It is noteworthy that Samsung Electronics has grown in leaps and bounds in a business notorious for

cyclical fluctuations. Founded in 1938 as a food processing and textile purveyor, the parent group entered

the electronic business as late as in 1969 when it created under its wings an electronic component

subsidiary. It was a decision made after considering the fast-growing domestic demand for electronic

goods.

Just one year after its founding, the Samsung Group established in 1970 another subsidiary

Samsung-NEC jointly with Japans NEC Corp. to manufacture electric home appliances and audio-visual

devices. In 1974, it expanded into the semiconductor business by acquiring Korea Semiconductor, one of

the first chip-making facilities in the country at the time. It was soon followed by the 1980 acquisition of

Korea Telecommunications, an electronic switching system producer.

In February 1983, Samsungs founder Lee Byung-chull made an epoch-making announcement, dubbed

the Tokyo declaration, that his company would enter the DRAM (dynamic random access memory)

business. And only one year after the declaration did Samsung became the third company in the world

that developed the 64k DRAM after the United States and Japanese predecessors. The march from

then onward as the pioneer in the memory chip-making industry has continued to this day for almost three

decades.

Although Samsung Electronics was already one of the biggest companies in Korea as early as the 1990s,

it now is by far the most important company with unrivaled influence on the economy through a large

network of supplier and partner companies as well as through its own revenue-generating power. Since

the onset of the 1997 Asian financial crisis, the company has become more powerful: While most

other high-tech companies were hit by cash-flow problems after the crisis, Samsung could avoid financial

difficulties by broad-based structural reforms.

After the crisis subsided, Samsung emerged as a global corporation. For four consecutive years from

2000 to 2003, it posted more than 5-percent net earnings when 16 large conglomerates out of 30 top

companies of the nation went out of business in the wake of the unprecedented crisis.

On 2009 and 2010, the US and EU fined Samsung Electronics with 8 other memory chip makers for itspart in a price fixing scheme From 1999 to 2002. Other companies fined included Infineon

Technologies, Elpida Memory (Hitachi and NEC) and Micron Technology. In December 2010,

The EU granted immunity to Samsung Electronics for its part in informing on other members of a price

fixing scheme.


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Value and philosophy

The Samsung Philosophy

At Samsung, we follow a simple business philosophy: to devote our talent and technology to creating superior products andservices that contribute to a better global society.

Every day, our people bring this philosophy to life. Our leaders search for the brightest talent from around the world, and

give them the resources they need to be the best at what they do. The result is that all of our productsfrom memory chips

that help businesses store vital knowledge to mobile phones that connect people across continents have the power to

enrich lives. And thats what making a better global society is all about.

OurValues

We believe that living by strong values is the key to good business. At Samsung, a rigorous code of conduct and these

core values are at the heart of every decision we make.

People

Quite simply, a company is its people. At Samsung, were dedicated to giving our people a wealth of opportunities to reach

their full potential.

Excellence

Everything we do at Samsung is driven by an unyielding passion for excellenceand an unfaltering commitment to develop

the best products and services on the market.

Change

In todays fast-paced global economy, change is constant and innovation is critical to a companys survival. As we have

done for 70 years, we set our sights on the future, anticipating market needs and demands so we can steer our company

toward long-term success.


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Integrity

Operating in an ethical way is the foundation of our business. Everything we do is guided by a moral compass that ensures

fairness, respect for all stakeholders and complete transparency.

Co-prosperity

A business cannot be successful unless it creates prosperity and opportunity for others. Samsung is dedicated to being a

socially and environmentally responsible corporate citizen in every community where we operate around the globe.

Vision 2020

As stated in its new motto, Samsung Electronics' vision for the new decade is, "Inspire the World, Create the Future."


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This new vision reflects Samsung Electronics commitment to inspiring its communities by leveraging Samsung's three key

strengths: New Technology, Innovative Products, and Creative Solutions. -- and to promoting new value for Samsung's

core networks -- Industry, Partners, and Employees. Through these efforts, Samsung hopes to contribute to a better world

and a richer experience for all.

As part of this vision, Samsung has mapped out a specific plan of reaching $400 billion in revenue and becoming one of the

worlds top five brands by 2020. To this end, Samsung has also established three strategic approaches in its management:

Creativity, Partnership, and Talent.

Samsung is excited about the future. As we build on our previous accomplishments, we look forward to exploring new

territories, including health, medicine, and biotechnology. Samsung is committed to being a creative leader in new markets

and becoming a truly No. 1 business g

consumer durables final project

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