indian white goods industry (lg & samsung)
TRANSCRIPT
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Presented by:M. Arsalan Sheikh (#7989)
Ahsan Bham (#8106)Sobia Khan (#6316)
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` Fastest growing industry in India
` Advertising and brand building has a key role
` Demand is seasonal and cyclical
` Price and brand differentiation
` Technology driven
` Continuous innovation
` Supply and distribution network` High involvement in R&D activities
` After-sales services
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Consumer DurablesConsumer Appliances Consumer Electronics
White Goods Brown Goodsy
M
obile phonesyTelevisionsyMP3 playersyDVD playersyVCD players
yRefrigeratorsyWashing machinesyAir conditionersySpeakers and audio equipment
yMixersyGrindersyMicrowave ovensyIronyElectric fansyCooking rangeyChimneys
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Expected to drive the market to a value of $7.7 billion by the end of 2013, anincrease of 60.7% since 2008. An anticipated CAGR of 10% for the five-year
period 2008-2013 In 2013, the Indian household appliances market is forecast to have a volume of
52.2 million units, an increase of 50.4% since 2008. The compound annual growthrate of the market volume in the period 2008-2013 is predicted to be 8.5%.
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` In term of purchasing power parity (PPP), India($3.55 Trillion) is the 5th largest economy in theworld and overtake Japan in the near future
become the 4th largest.` The middle class in India is fueling economic
growth and disposable incomes are expected togrow at an average of 8.5% per year until 2015.
` The urban market has now largely become aproduct replacement market.
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` Indian consumer durable market is expected toreach Rs. 40 Billion by on 2010
` The Indian household appliances market grew by
32% in 2010.` The top 67 cities in India are the key potential
markets for appliances. These cities contribute14% of the GDP.
` The market share of MNCs in the consumerdurables sector is 65%.
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` The rural market is growing faster than the urban market.
` Rural sector offers huge scope for consumer durables industry, as it
accounts for 70% of the Indian population.
` The urban market and the rural market are growing at the
annual rates of 7%-10%and 25% respectively.
` Rural areas have the penetration level of only 2% and 0.5%
for refrigerators and washing machines respectively.
` In case of television the penetration level is 18%.
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MNCs National R gionalKoro L o Samsungo Hyundai
Onida
id o on
BPL
Kelvinator
All yn
Godrejoltas
IFB
Bush
Cro n
Salora
Weston
Beltak
OskarChinao TCLo Haier
Hollando Phillips
Japano Sonyo Panasoni
o Sharpo Hitachio Sansuio Akaio Ai ao Whirlpoolo Electrolux
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1995-1996 2005-2006 2009-2010
Demand 3.43 million 8.72 million 13.14 million
Penetration level149 per 1,000
households
319 per 1,000
households
451 per 1,000
households
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` Demographic
Income
Occupation
` Geographic
Tier 1 Cities
Tier 2 Cities
` Psychographic
Life style
Personality
` Behavioral
Value
Benefit sought
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` Personal Income
` Availability of financing
` Product affordability
` Increasing share of organized retail
` Entry of heavyweight retail players
` Increasing appreciation of the Rupee
` Technological and design advancements
` Innovative advertising and brand promotion
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Situation
` LG Electronics India Pvt. Ltd., awholly owned subsidiary ofLGElectronics, South Korea was
established in January 1997 afterclearance from the ForeignInvestment Promotion Board.
Growth Strategy
` Focused on innovative, feature-rich
products V
alue-plus platform` Offering affordable products at a
lower margin cutting on volume tobring in revenues
Key Success Factors
` Innovative marketing strategies
LG has differentiated its products usingtechnology and health benefits.
` Local and efficient manufacturing to
reduce cost
Implementing a digital manufacturingsystem (DMS) as a cost-cuttinginnovation.
` Product localization
LG came out with Hindi and regionallanguage menus on its appliances
` Regional channel strategy and wide
distribution networkLG has over 46 branch offices and 110area offices across the country.
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` Objectives
The ai of L is to provide the custo ers with ut ost
satisfaction through leadership.
The funda ental policy of develop ent is to secureproduct leadership that the Custo ers ay have the
ut ost satisfaction.
` Core Competency
Product leadership, Market leadership, People leadership
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` Strength Market leader in home
appliance segment Manufacturing unit in tax-
incentive areas Wide range of product
categories to tap theconsumer upper-middleclass and upper-upper
class LG, having the widest
distribution network in theindustry
Good after-sales services
` Weakness
Consumer compare LG
products with its competitor
Samsung and Sony, not
with other foreign brand
Similar product categories
as compare to its close
competitors Samsung
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Situation
Samsung India Electronics Ltd. is asubsidiary of Samsung ElectronicsCorporation (SEC) headquartered in
Seoul, Korea. Samsung India wasformed in 1995.
Growth Strategy
`Building an affluent customer base
higher priced products
`Creating a premium brand image designand technology innovations
Key Success factors
`Innovative promotion and advertising
Branded its products as superiortechnology and environment friendlyones.
`Launching the best in design and
technologySamsung has won over 150 awardsin India for its technology and designbased products.
`Customized products for its consumers
understands the local culturalsensibilities to customize its products
according to the market.`Manufacturing plant and localization
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` Opportunities
The Indian Mass Market.
The high end value drivenproposition helps increase
the Market Share.
Samsung is well known forit product differentiation
` Threats
Indian Mass Market maybe captured by a rivalcompany, LG, Onida,Videocon;etc.
Increased emergence ofmodern retail chains- aproblem as Samsung isinvesting in building a retail
network across the country
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` Localized positioning
` Focus on local R&D
` Range of products in awide range
` Dealer network is verystrong
` Many products speciallyfor India
` Positioning on a globalbasis
` Centralized R&D
` Lesser Range ofproducts
`
Dealer Network not asstrong
` Less Indian CustomerCentric products