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    GOA INSTITUTE OF MANAGEMENT

    Videocon Industries

    LimitedMarketing Term Paper

    Section B Group 8

    Roshan Roy 2010103

    SamvedBanhatti 2010104

    Ankur Raj 2010105

    Sarat Gopinath 2010106

    Sarika Sinha 2010107

    Saurabh Prabhudesai 2010108

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    Contents

    Company Profile ................................ ................................ ................................ ................................ 2

    Business ................................ ................................ ................................ ................................ ............ 2

    Segment ................................ ................................ ................................ ................................ ............ 3

    SWOT Analysis of Videocon ................................ ................................ ................................ ............... 4

    Strengths ................................ ................................ ................................ ................................ ....... 4

    Weaknesses ................................ ................................ ................................ ................................ ... 5

    Opportunities ................................ ................................ ................................ ................................ 5

    Threats ................................ ................................ ................................ ................................ .......... 5

    Value Chain of Videocon ................................ ................................ ................................ .................... 6

    Porters Five Forces ................................ ................................ ................................ ............................ 6

    Threat of New Entrants: ................................ ................................ ................................ ................. 7

    Bargaining power of Consumers: ................................ ................................ ................................ ... 7

    Threat of substitutes: ................................ ................................ ................................ ..................... 7

    Competitive rivalry within the consumer durables industry:................................ ............ ............... 8

    Competitive rivalry to Videocon in the mobile handsets business: ................................ ................. 8

    Competitive rivalry to Videocon in the direct to home television segment. ................................ .... 9

    The Brand Transition ................................ ................................ ................................ ......................... 9

    Recommendations: ................................ ................................ ................................ .......................... 10

    Outlook and Scope ................................ ................................ ................................ .......................... 11

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    Company Profile

    Videocon Industries Limited (VIL) incorporated in 1985, is undoubtedly one of the biggest

    players in the local consumer electronics segment. The company has a market capitalization

    of over $2.5 billion and is backed by the Videocon group. Such is the companys size in the

    Indian consumer electronics terrain, that it accounts for over 90% of the CMIE (Centre forMonitoring Indian Economy) consumer electronic index. With the passage of time, it has

    added other services to its portfolio, and is currently involved in oil and gas exploration,

    manufacturing of glass shells, mobile phones and telecommunications (rendered as part of the

    Videocon group), in addition to its core business of manufacturing and distributing a range

    of consumer electronic goods. The company has a strong presence in both the local and

    global landscape, and is involved in joint venture agreements with 23 other entities. It has

    also established Research and Development (R&D) centres in China, Aurangabad, Japan and

    Gurgaon. The company is chaired and managed by Mr.VenugopalDhoot, well-known in

    Indian business circles, having amassed a personal net worth of $1.8 billion.

    Business

    The consumer electronics division accounts for nearly 90% ofVILs total revenue (as at

    September 2009), while its oil and gas exploration activities serve as a subsidiary business.

    As part of the consumer electronics division, the company sells colour televisions, LCD

    (liquid crystal display) televisions, refrigerators, washing machines, microwave ovens,

    airconditioners, DVD (Digital Video Disc) players, home UPS, batteries and audio systems.

    It also manufacturers glass shells, electronic tuners and flyback transformers (FBT) for its

    other products. As far as its oil and gas activities are concerned, the company is currently,

    only into oil exploration, and intends to foray into oil extraction, oil distribution and gas

    distribution. Historically, the revenues from the Oil and Gas segment of the firm have moved

    in tandem with the global crude oil prices. Recently the company has also branched into the

    telecommunications and mobile phones activities. However the telecommunication services

    will be rendered through its subsidiary- Videocon Telecommunications Limited. The

    company is extremely bullish about this segment and plans to invest Rs.14000 crore over the

    next 3 years for this segment alone. Its mobile phone segment too has done exceedinglywell,

    considering that the company only entered this segment in November 2009. So far, the

    company has been selling 2.5-3 lakh units a month and with the introduction of nine new

    handsets in the current month, the company has revised its sales target to 10 lakh units a

    month. It will however, have tocompete with the like of Bharti and Idea for the

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    commissioning of the 3G license. The company has already introduced GSM services in

    Tamil Nadu and plans to roll out its mobile service activities in 100 towns.

    Segment

    Indias consumer electronics segment is currently valued at$23.3 billion and that is expected

    to rise to $41.4 billion by2014, growing at a CAGR of 15.5%. While Videocon isconsidered

    to be the most prominent Indian based consumerElectronics Company, it faces stiff

    competition from a host ofmultinational companies. Thewashing machine segment grew at a

    CAGR of 11% and isfurther expected to grow at a rate of 12-15% over the nextthree years,

    while the air conditioning market grew at aimpressive rate of 19%. A boom inreal estate and

    infrastructure industry, coupled with a changein perception of accepting air conditioners as

    utility productsrather than luxury items will spur growth in this segment.

    The refrigerator market on the other hand grew at a modestrate of 10% and is expected to

    grow at the same pace. There isparadigm shift in the preference of frost free refrigeratorsfrom

    direct cool refrigerators and companies that specialize inthe former category can expect do

    better than the others. TheIndian micro wave segment however remained stagnant andis not

    perceived to be a high growth segment. Televisionscontinue to be the mainstay of the

    consumer electronicsdivision, particularly with LCD televisions catching on, bigtime. VILs

    share in the LCD TV segment stands at around12-18% and the company is looking to

    increase its marketshare by the end of the financial year. Nonetheless the future of the

    consumer electronics segmentlies in the rural markets as the urban market will soon turninto

    a replacement and an up-gradation market. The oil and gas industry contributes

    approximately 15% toIndias GDP. Indias energy deficit is mounting where thedemand for

    oil and gas far exceeds the supply. Wireless additions seem to be making rapid progress.In

    December 2009 there was an addition of 19.1 millionsubscribers, up by 76.6% from a year

    ago.The telecommunications segment is witnessing some positiveactivity with the

    commissioning of 3G licenses just around thecorner. Sales and profits for most

    telecommunication firmshave been disappointing mainly on accounts of falling

    ARPUs(Average Revenue per Users), MOUs (Minutes of Usage),fierce tariff wars and

    network expansion. As at March 2010,the total telecom subscriber base in the country stood

    at612.2million, up by 42.5% from a year ago. The government isplanning to increase 2G

    spectrum usage charges by 2% andthis will put further pressure on the operating margins

    oftelecom companies.

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    12. Globally acceptance.

    13. Extensive knowledge of the local market.

    Weaknesses

    1. Lack of impetus on new technological innovations and developing new products.

    1. Fewer margins to the distributor/dealer.

    2. No proper approach of target customer.

    3. Wide brand basket, which might lead to conflict of interest unless effectively managed

    4. CRT technology is losing popularity.

    5. Less focus on unconventional channel and online marketing.

    6. Lack of efficient and prompt customer service.

    7. Lack of exclusive showrooms and exclusive custo