final project be frm urvashi

7/30/2019 Final Project Be Frm Urvashi

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FINAL PROJECT

Business Environment

Environmental factors and constraints are largely if not totally, external and

beyond the control of individual industrial enterprises and their

managements. These are essentially the givers within which firms and their

managements must operate in a specific country and they vary often greatly

from country to country.

This above definition is give by Barry M. Richman & Melvyn Copen.

In this assignment the environmental analysis of Consumer Durable

Industryis given where factors affecting this particular industry based on

their environment are given.

OVERVIEW OF THE CONSUMER DURABLE INDUSTRY:-

Consumer durable industry is characterized by various companies who

produces and sells consumer durable goods.

Consumer durables are the products whose life expectancy is at least

3 years. These products are hard goods that cannot be used up at once.

Durable goods are typically characterized by long interpurchase timesthe

time between two successive purchases.

The consumer durables sector can be segmented into consumer

electronics, such as, VCD/DVD, home theatre, music players, color

televisions (CTVs), etc. and white goods, such as, dish washers, air

conditioners, water heaters, washing machines, refrigerators, etc Examples

of consumer durable goods include cars, appliances, business equipment,

electronic equipment, home furnishings and fixtures, house ware and

accessories, photographic equipment, recreational goods, sporting goods,


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toys and games.

Growth in 2005-06

Consumer Durables Growth

Air Conditioner 20-25%

Refrigerator 5-10%

Microwave Ovens 25%

Washing Machines 5-10%

Color Televisions (CTVs) 15-20%

Black & White Televisions -20%

Clock 10%

Watch 10%


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VCDs 30%

Consumer Electronics (Overall) 9%

These are the players in the consumer durable industry.

Players in Consumer Durable Industry

1. AIWA 12. Haier India 23. Samsung India

2. Akai India 13. Hitachi Ltd. 24. Samtel

3. BenQCorporation

14. Khaitan India Ltd. 25. Sansui India

4. Blue Star Ltd. 15. LG Electronics India Ltd. 26. Siemens

5. BoseCorporation

16. MIRC Electronics Ltd. 27. Sony India

6. BPL 17. Mitsubishi ElectronicsCorporation

28. Thomson Ltd.

7. Canon India 18. Nokia India 29. Titan Industries

8. Carrier AirconLtd.

19. Onida 30. ToshibaCorporation

9. Daewoo India 20. Pace Micro Technology 31. VideoconIndustries

10. Electrolux-

Kelvinator

21. Panasonic 32. Whirlpool

Appliances11. Godrej 22. Philips India

(*In this table names which are bolded are top players in the industry.)

ENVIRONMENTAL STUDY


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These are two environments external to the business affect each and every

industry.

MACRO ENVIRNMENT

Major external and uncontrollable factors that influence an

organization's decision making, and affect its performance and strategies.

These factors include the economic, demographics, legal, political, and social

conditions, technological changes, and natural forces. An organization's

macro environment consists of nonspecific aspects in the organization's

surroundings that have the potential to affect the organization's strategies.

Economic Environment


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This environment includes the current and anticipated stage of the

business cycle, as well as inflation and interest rates. This will define

how an organization can effectively utilize the availability of resources

to the best of its utility. It consists of factors that affect consumerpurchasing power and spending pattern. Following factors as important

elements:

o Increase in family income

o Availability of cheap sources of borrowing funds

o Availability of attractive sales promotional schemes

o The changes in the rate of taxes and duties levied by the

government

o Availability of surplus funds (saving)

o Availability of additional sources of income

o Pricing strategies of companies

o The perceived risk in terms of technological obsolescence.

It is clear that increase in family income accounted for an

average score of 3.4 having a medium level of influence in purchase of

the durable products. Secondly, the availability of attractive sales

promotional schemes announced by companies accounted for an

average score of 3.3 showing a medium level of influence in purchase

of durable products. . Thirdly, the pricing strategies of companies

accounted for an average score of 3.2 also having a medium level of

influence in purchasing durable products. Whenever the consumer

purchases any durable product, the product quality and price of the

product have major influences. Fourthly, the availability of surplus

funds and the perceived risk in terms of technological obsolescence

each had accounted for an average score of 3.1 respectively. Since,

technological improvement is often inevitable due to foreign


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collaborations any consumer prefers to make use of the most recent

technological advancement. The changes in the rate of taxes and

duties levied by central / state government and availability of cheap

sources of borrowing funds accounted for an average score of 2.9 and2.8 respectively showing a medium level of influence. Hence,

the above results showed that the economic factors as a whole have

an average medium level influence in purchase of durable products.

Demographic Environment

Demographic environment consists of following factors that affects the

consumer durable industry;

o Density,

o Fertility,

o Growth

o Language

o Literates

o Migration

o Primitive Tribe Group

o Population

o Religion

o Residential

o Houses and Households

o Sex ratio


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o Workers

Socio-Cultural Environment

The task of any marketing executive is becoming more

complex because our cultural patterns life style, social values and

beliefs, which are changing more quickly than they used to. A


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consumers behavior also is influenced by social factors, such as the

consumers small groups, family and social roles and status. These

factors are shared by a society and are transmitted from generation to

generation i.e., the influence of older and younger generation and viceversa. In recent times, extensive exposure has led the younger

generation into more influence in changing 'Cultural Revolution' that

has resulted in replacement of new attitudes on culture.

For measuring the influence social and cultural factors hold

over the purchase of durable products these factors are useful up to a

great extent;

o Increase in the number of nuclear families

o Influence of reference groups

o Chance of more interactions among family members

o The desire for leisure time

o Ones standard of living / status

o Need for comfort / sophistication

o Education and level of occupation

o Dominance of elderly person in family

o The influence of younger generation in a family

o Compulsions of religious values / moral values

o Individual values and attitudes

o Experience etc

o Influence of sentimental / traditional values

o Social conditions and freedom of living and learning attitudes of

individuals

Technological Environment


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Dueto the open market condition, many foreign companies

have entered into the Indian market with advanced technology. This

has led to change in life style of our Indian consumers that has in turn

resulted in a challenge to our existing Indian companies to reconsidertheir strategies of production and marketing.

MICRO ENVIRNMENT

Micro or Task environmental factors are those that influence a company's

or product's development but that are outside of the company's control.

Customers

The study of consumer behavior is much more important than

the number of consumers in the market because each consumer is

unique. Their behavior, attitude, temperament, mentality, and

personality have their own say on what he wants and how his/her

needs could be satisfied. A persons buying choices are mostly

influenced by four major psychological factors

o Motivation

o Perception

o Learning


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o Beliefs and attitudes

These are the factors that affect consumers while purchasing durable

products;

o Increase in competitions among sellers of various brands

o Price differentials among various brands/ sellers

o Technological superiority seen among the products

o Influence of promotional efforts/ additional benefits

o Life expectancy of the product

o Various product attributes

o Sources of information

o Assurance of prompt after sales service

o Resale value of an item

o Frequency of usage of the product

o Increasing consumers expectations

o Availability of choice leading to complexity in purchase

o Brand loyalty among consumers

o Sentimental/ traditional values

o The availability of leisure time

o Convenience in usage of the product

o Realization of his ego needs


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Due to competition more number of foreign brands have

entered and occupied the Indian market in durable products industry.

It has given an enormous scope to Indian consumers through a range

of choices in their mind. Secondly, the technological superiority seenamong the products and increasing consumers expectations.

Basically, our Indian consumers are price conscious, while they

purchase any product. Knowing this, all foreign brands started

launching their products with the latest technology at a competitive

price. This has led to Indian brands reconsidering their position and

opting for latest technology at competitive price level with the foreign

brands. Of course, our Indian consumers basically hold loyalty towards

the particular brand to which they are associated. Indian consumers

normally hold their beliefs on certain sentiments like seeing an

auspicious day, time, color, place etc., or they simply follow the

traditions followed by their ancestors. Further they also look at a

reasonable resale value for the investment made on purchasing the

durable products. Likewise all above factors have their own bearing on

purchase decision in case of durable products.

Competitors

Competitors strategies: A companys competitive environment

obviously is a major

influence on its marketing programs. Skillful marketing executives

constantly monitor all


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aspects of competitors marketing activities their products, pricing,

distribution systems and promotional programs. Moreover, the destiny

of many Indian firms today is affected by international competition due

to our new economic policy of government called liberalization. Thishas really challenged many Indian companies to reconsider the

strategies adopted for their survival.

Challenges To The Consumer Durable Industry

1. Heavy Taxation:

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

presentstructure the total tax incidence in India even now stands at around

25-30 per cent, whereas the corresponding tariffs in other Asian countries

are between 7 and 17 per

2. Potential markets remaining yet untapped:

A large segment of the domestic market, mostly therural market is yet to be

tapped. Tapping this yet untapped and unorganized market is a major

challenge for the Indian consumer durables sector. About 65 per cent of

Indian population that lives in its villages still remains relevant for some

consumer durables companies. Its also true that companies are trying hard

to make their marketing channels more and more efficient.

3. Poor Infrastructure:

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

industry. Regular power supply is imperative for any consumer electronics

product. But that remains a major hiccup in India.

4. Threat from new entrants, especially global companies:


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The domestic consumer durables sectorfaces threat from newer companies,

especially from global ones who have technologically advanced products to

offer.

5. Rivalry and competition:

Presence of a large number of players in the domestic consumer durables

industry leads to competition and rivalry among companies. Threat from

rivalry and competition poses a threat to domestic companies.

6. Threat from substitute products/services:

The domestic consumer durables industry is plagued bythreats from

substitute products. Easy accessibility to theatres/multiplexes, especially in

urban areas has turned off the viewership from TV to a large extent. With the

advent of a horde of FM radio stations, radio sets have now substituted TVs.

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Opportunities To The Consumer Durable Industry

1. Rising rate of growth of GDP:

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

higher propensity to consume with preference for sophisticated brands would

provide constant impetus to growth of white goods industry segment.2. The urban consumer durable market:

As durable products are not available at their nearest place rural

people purchase them from their nearest hometown, hence, it results


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into increase in demand at urban markets. The urban market is a

replacement and up gradation market now.

3. Attractive financing schemes:

Consumer goods companies are themselves coming out with attractive

financing schemes to consumers through their extensive dealer network.

This has a direct bearing on future demand.

4. Growth of media:

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

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

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

remotest of markets.

5. Rise in disposable income:

The demand for consumer electronics has been rising with the increase in

disposable income coupled with more and more consumers falling under the

double income families. The growing Indian middle class is an attraction for

companies who are out there to woo them.

6. Availability of newer variants of a product:

Consumers are spoilt for choice when it comes to choosing products. Newer

variants of a product will help a company in getting the attention of

consumers who look for innovation in products.

7. Rise in the share of organized retail:

Rise in organized retail will set the growth pace of the Indianconsumer

durables industry. According to a working paper released by the IndianCouncil forResearch on International Economic Relations (ICRIER), organized

retail which constituted a merefour percent of the retail sector in FY07 is

likely to grow at 45-50% per annum and quadruple itsshare in the total retail

pie 16% by 2011-2012. The share will grow with bigger players entering the

market.


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8. Innovative advertising and brand promotion:

Sales promotion measures such as discounts, freegifts and exchange offers

help a company in distinguishing itself from others.

9. Festive season sales:

Demand for colour TVs usually pick up during the festive seasons. As a result

most companies come out with offers during this period to cash in on the

festive mood. This periodwill continue to be the growth driver for consumer

durable companies.

10. Customer power with respect to availability of choice:

The availability of a wide product line onaccount of most products being

homogeneous, poses a threat for companies operating in theconsumer

durables sector. Customers have the choice of both domestically produced

and importedgoods, with similar features

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