pm videocon case
TRANSCRIPT
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MULTI-BRANDING STRATEGY OF
VIDEOCON INDUSTRIES
IN THE
CONSUMER DURABLES SECTOR
Presented by:
Bhavika SawhneyBhoomika Chadha
Prateek Arora
Tarun Dhingra
Trisha Pruthi
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It is a marketing strategy under which two or more similar products
of a firm are marketed under different brand names.
Many a times, these products are competing ones and are
marketed under brand names which are completely unrelated.
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1984:- NVDhoot with 3 sons
:- Venugopal, Rajkumar & Pradeep
founded VI
Earlier, they started a business of sugar mills and some other low
profile industrial interests in the region of Maharashtra
Establishment ofVI surprised the Industry Watchers .
1987:- Manufacturing and Marketing the Videocon Range of B&W
AND Color Televisions, launched washing machines.
1989:-Home Entertainment Systems and Air Conditioners
1991:- Refrigerators and Coolers.
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Early 90s :- After the failure ofVI to diversify into Real Estate,
Crucial decision Was made to manufacture CRT glass shells.
Set up a world class manufacturing facility at BHARUCH, GUJRAT.
1996:-Entering Energy Sector. Investments into Rava Oil Fields
gave it a regular flow of cash.
1998:- Bought a TV manufacturing facility of PHILIPS in WB.
1999:- Took the services of McKinsey & Co. to draw the plan for
restructuring the company.
Company established 8 SBUs headed by independent chief
operating officers
These were:- MANUFACTURING,AFTER SALES , THE AKAI
BRAND, THE SANSUI BRAND % VIDEOCON BRAND
Others were Product Specific:- TVs, Refrigerators and Washing
Machines
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7TH JULY,05:- Acquisition of ABE in EKL.
Focus was on Multi Branding Strategy.
Agreement with HUNDAI ELECTRONICS LTD .
Licensing Agreement with Toshiba & Sansui
WHY?
Was unable to face the immense competition
Market Share % Market Growth were the major factors.
Large Sales Volume with Cost Effectiveness
VI :- Profitable Company & Had resources( man power,
Financial,Technical etc ) to sustain a Multi Branding Strategy.
Focus was on Long term Goal.
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VIDEOCON INDUSTRYS
BRAND PORTFOLIO
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Videocon entered the consumer durables sector in mid 1980s
VI marketed its products under the Videocon brand and was
positioned and perceived as a mid segment brand.
Competed directly with BPL and Onida.
But the entry of LG and Samsung disturbed its market share.
To counter attack- VI adopted multi-brand strategy and to boost
brand image came up with a high-decibel ad campaign in 2001.
Immediate result was increase in sales by 30% but market share
declined in 2002.
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In 1980s, VI went into an agreement with the Japanese company,
Toshiba, to manufacture its range of colour televisions.
In 1998, VI launched Toshiba brand projection TVs. They competed
directly with Samsungs range of projection TVs.
In 2001,in order to increase its focus on marketing Toshibas high-
end products, VI created a a wholly owned subsidiary called
Kentosh Electronics India Ltd.(KEIL)
KEIL was also to market Kenwood branded Hi-Fi audio products.
In 2002, Kenwood and VI parted ways. Till 2005, KEIl sold DVD
players, TVs, flat TVs, Projection TVs under the Toshiba brand.
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In March 1999, VI entered into a join venture with Akai Electric Co.
Ltd.(AECL), to form a new a entity called Akai India Ltd., in which VI
had70
% share.
VI followed a two-pronged strategy for the Akai brand. It continued to
sell low price models but made efforts to emphasize quality and
technology in the communication.
Over the years, Akai was projected as a price warrior. Hence, it became
a player in the lower end of the market.
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Sansui came into VIs fold in 1990s
Initially, the products under the brand were priced on the higher
side and competed with brands like Philips.
But gradually, prices were slashed
Sansui also launched exchange schemes for its CTVs
The brand heavily depended on promotional offers and discounts.
But inspite of the promotions Sansui couldnt gain a significant
market share.
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KAIL launched KENSTAR in 1996.
Introduced with microwave ovens and then followed by coolers,
mixers and grinders, toaster, juicers and refrigerators.
KENSTAR was positioned as premium segment and entered in to
agreements with Yugoslavia and an Algeria based firm to
manufacture and supply KENSTAR branded CTVs
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2004-05 LG and SAMSUNG spoiled the party ofVIDEOCON and
subsequently LG acquired 40% of market share in ovens
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2004:VIDEOCON(VI) licensed HYUNDAI brand from HEI South
Korean co for5% royalty on sales.
2005:VI made HE INDIA a wholly owned subsidiary.
HYUNDAI was positioned at the upper end market.
Company had planned to spend heavily for advertising and R&D.
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2005:VI took over EKL. It brought the Indian rights of
ELECTROLUX for5 years and 25 years for KELVINATOR. ALLWYN
brand also came under the VI fold subsequently.
2006:VI announced it will stick its KELVINATOR brand with
Refrigerators and its tagline will also remain same the coolest
one.
VI expanded its dealer and showroom network to increase its reach.
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Prior to liberalization, Indian durables industry was dominated by
Indian brands.
By the end of1990s, the share ofVideocon steadily declined.
In order to onslaught from the competition, VI adopted the multi
branding strategy by acquiring Toshiba, Sansui and Akai.
The strategy was meant to fend off attacks on core brand from
rivals.
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In 2000, VI launched several products under its core brand, Sansui
and Akai and VI was positioned as a Value brand.
SANSUIKENSTAR
VIDEOCONALLWYNKELVINATOR
TOSHIBA
HYUNDAI
AKAIELECTROLUX
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Positioning and targeting has to be distinct, or else the brands
tend to cannibalize each others share.
In 1999, VI had market share 10.5% which fell to 7.3% in 2002,
whereas Sansui increased its market share from 4.6% to 6.7%.
Having several brands, unless backed by constant upgradation in
technology and design would prove to be burden to the company.
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Inexperience in managing premium brands. For instance, Kenwood
which was a premium brand couldnt make a dent in the marketing
arrangement.
Multi-branding strategy requires deep pockets who can allocate
high marketing budgets for each brands.
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2005 LG & Samsung lions share of T.V. & home appliances
market.
Philips rejuvenating business in India, Haeir & TCL planning to
establish themselves.
Videocon not doing well in all product categories.
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34%
14%11%
13%
24%
4%
Market Shares in Indian
Washing MachinesMarket in
2004
LG
Whirlpool
IFB
Samsung
Videocon
Others
11% 10%
17%
30%
23%
9%
Market Shares in Indian
RefrigeratorsMarket in 2005
Videocon
Godrej
Samsung
LG
Whirlpool
Others
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VI will have to manage its existing brands as well as EKLs brands.
Indian white goods industry very competitive. VI capable of
investment in building brand equity.
VI should not use price plank for core & premium brands.
VI needs to invest in technology.
VI may be able to pose a challenge for Korean brands because of
its multi-branding strategy.
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Q1.
Considering the fact that marketing
costs are escalating, how prudent, in
your view, isV
Is strategy of havingseveral brands?
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Good strategy when faced by heavy competition.
Protection of core brand.
Increases shelf space.
Keeping firms managers on toes by generating internal
competition.
Company can fill up price & quality gaps, & saturate the market.
Company can serve effectively to brand switchers.
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Cannibalization
May cause operational confusion.
Heavy budgets needed.
Videocon a mid-segment brand, inexperienced in handling
premium brands (poor management).
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Do you think that VI adopted the multi-
branding strategy because it failed tocounter competition with a single
brand?
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Prior to liberalization of the Indian Economy, the Indian Consumer
Durables Industry was dominated by Indian Brands like BPL, Onida
and Videocon. By the end of1990s, Korean brands like LG and Samsung had
established a strong foundation in the country by expanding their
dealer networks.
As a result, VIs share declined.
In order to onslaught the competition, VI acquired Indian Rights for
brands like Toshiba, Sansui and Akai.
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Though the share ofVideocon fell, the other brands were able to
corner market share, thereby giving VI a respectable combined
market share.
Multi-Branding strategy was akin to warfare. Just as a king is
flanked by several soldiers in a battle, the multi-branding strategy
allowed VI to protect its core brand Videocon.
So the strategy was meant to fend off attacks on the core brand
from rivals.
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With the Korean brands, especially LG,
entering rural India in a big way, what in
your view areV
I
s chance of becomingthe No1. consumer durables company
in near future? Justify youre answer
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TH
AN
K YOU!