Sales Marketing PresentationSales Marketing Presentationon on

Consumer DurablesConsumer Durables

Classification Of Consumer Classification Of Consumer DurablesDurables

Consumer Durables Industry Consumer Durables Industry

• Before the liberalization of the Indian economy, only a few Before the liberalization of the Indian economy, only a few companies like Kelvinator, Godrej, Allwyn, and Voltas were companies like Kelvinator, Godrej, Allwyn, and Voltas were the major players in the consumer durables market, the major players in the consumer durables market, accounting for no less than 90% of the market. accounting for no less than 90% of the market.

• Then, after the liberalization, foreign players like LG, Sony, Then, after the liberalization, foreign players like LG, Sony, Samsung, Whirlpool, Daewoo, Aiwa came into the picture. Samsung, Whirlpool, Daewoo, Aiwa came into the picture. Today, these players control the major share of the consumer Today, these players control the major share of the consumer durables market.durables market.

• Consumer durables market is expected to grow at 10-15% in Consumer durables market is expected to grow at 10-15% in 2007-2008. It is growing very fast because of rise in living 2007-2008. It is growing very fast because of rise in living standards, easy access to consumer finance, and wide range standards, easy access to consumer finance, and wide range of choice, as many foreign players are entering in the market of choice, as many foreign players are entering in the market

Consumer Durable IndustryConsumer Durable Industry

• The penetration level The penetration level of consumer durables of consumer durables is very low in India, as is very low in India, as compared with other compared with other countries. This countries. This translates into vast translates into vast unrealized potential. unrealized potential.

• For example, in case For example, in case of color televisions of color televisions (CTVs), the (CTVs), the penetration level of penetration level of various countries is:various countries is:

India India 24%24%

Brazil Brazil 11%11%

China China 98%98%

US US 333%333%

France France 235%235%

Japan Japan 250%250%

Demand and Penetration Demand and Penetration Level of White Goods in Level of White Goods in IndiaIndia

Year Year 1995-19961995-1996 2005-20062005-2006 2009-20102009-2010

DemandDemand 3.43 million3.43 million 8.72 million8.72 million 13.14 million13.14 million

PenetratiPenetration on LevelLevel

149 per 1,000 149 per 1,000 HouseholdsHouseholds

319 per 1,000 319 per 1,000 HouseholdsHouseholds

451 per 1,000 451 per 1,000 HouseholdsHouseholds

Consumer Durable IndustryConsumer Durable Industry

• In a study conducted by Frost & Sullivan In a study conducted by Frost & Sullivan and commissioned by India and commissioned by India Semiconductor Association (ISA), the Semiconductor Association (ISA), the demand for Electronic Appliances is demand for Electronic Appliances is projected to grow exponentially at a projected to grow exponentially at a compounded annual growth rate (CAGR) compounded annual growth rate (CAGR) of 30%.of 30%.

Consumer Durable IndustryConsumer Durable Industry

The key growth drivers for the The key growth drivers for the Indian consumer durables Indian consumer durables industry:industry:

• Rise in disposable incomeRise in disposable income

• Availability of newer variants of a Availability of newer variants of a productproduct

• Product pricingProduct pricing

• Availability of financing schemesAvailability of financing schemes

• Rise in the share of organized retailRise in the share of organized retail

• Innovative advertising and brand Innovative advertising and brand promotionpromotion

• Festive season salesFestive season sales

Projected growth in detailProjected growth in detail Excellent growth rate projected…..Excellent growth rate projected…..

CommodityCommodity Growth %Growth %

Air ConditionersAir Conditioners 2525

Split Air ConditionersSplit Air Conditioners 6060

Frost-free refrigeratorsFrost-free refrigerators 5454

Washing machinesWashing machines 2020

Fully automatic Washing machinesFully automatic Washing machines 3535

Microwave ovensMicrowave ovens 3535

LCD TVsLCD TVs 110110

Plasma TVPlasma TV 100100

VCD/MP3 PlayersVCD/MP3 Players 2020

DVD PlayersDVD Players 2525

Organized DVD PlayersOrganized DVD Players 3030

Major challenges plaguing this Major challenges plaguing this industry:-industry:-

• Threat from new entrants, especially Threat from new entrants, especially global companiesglobal companies

• Rivalry and competitionRivalry and competition

• Potential markets remaining yet Potential markets remaining yet untappeduntapped

• Threat from substitute Threat from substitute products/servicesproducts/services

• Customer power with respect to Customer power with respect to availability of choiceavailability of choice

CompanyCompany

The Late Shri. Nandlal Madhavlal DhootFounder, The Videocon Group

( 26 February 1932 - 26 April 1993 )A man of Ideas. A man of Substance.

A man of Vision.

Company ProfileCompany Profile

• The Videocon group has an annual The Videocon group has an annual turnover of 4.1 billion $, turnover of 4.1 billion $,

• It is one of the largest Consumer It is one of the largest Consumer Electronic and Home Appliances Electronic and Home Appliances companies in India.companies in India.

• Since 1998, it has expanded its Since 1998, it has expanded its operations globally, especially in the operations globally, especially in the Middle East Middle East

Videocon at a glanceVideocon at a glance

• Videocon at a glance:-Videocon at a glance:-

Key Factor for the successKey Factor for the success

• To delight and deliver beyond expectation To delight and deliver beyond expectation • Through ingenious strategy Through ingenious strategy • Intrepid entrepreneurshipIntrepid entrepreneurship• improved technology improved technology • Innovative products Innovative products • Insightful marketingInsightful marketing• Inspired thinking about the futureInspired thinking about the future

Sales and Distribution (Urban Sales and Distribution (Urban area)area)• Increasing the number of dealers by offering them Increasing the number of dealers by offering them

lucrative margins.lucrative margins.• Discounts during festival times.Discounts during festival times.• Dealer meetings several times a year to maintain Dealer meetings several times a year to maintain

cordial relation with dealers.cordial relation with dealers.• Dividing dealers into silver and gold category as per Dividing dealers into silver and gold category as per

their performance and as per this the margin their performance and as per this the margin varies.varies.

• Authorised sales person in dealers stores for Authorised sales person in dealers stores for promotion of their products.promotion of their products.

• Coupons and scratch cards during festival seasons.Coupons and scratch cards during festival seasons.

Sales and Distribution (Rural Sales and Distribution (Rural area)area)• Indian rural consumer lives in over 6 lakhs villages across the country and Indian rural consumer lives in over 6 lakhs villages across the country and

they account over 70% of the population.they account over 70% of the population.• Strategy:-Strategy:-• Cashing on improvement in lifestyle of rural consumerCashing on improvement in lifestyle of rural consumer• Increase in the number of outlets from 23 to 46 in recent months.Increase in the number of outlets from 23 to 46 in recent months.• Posting of 930 area managers across the country. This brings them closer Posting of 930 area managers across the country. This brings them closer

to the consumerto the consumer• Increase in road shows, society demonstration and localized shows.Increase in road shows, society demonstration and localized shows.• Increased annual advertisement and promotion budget from 25 to 42 Increased annual advertisement and promotion budget from 25 to 42

crores.crores.• Cheaper products to lure the rural consumer.Cheaper products to lure the rural consumer.• 2600 mobile authorized service personnel.2600 mobile authorized service personnel.• ““Volumes makes up in the city whereas values makes up in rural area”. Volumes makes up in the city whereas values makes up in rural area”.

Dealer margin increased from 7 to 12 percent.Dealer margin increased from 7 to 12 percent.

Some facts, Irregularities:-Some facts, Irregularities:-

• The GovtThe Govt charges 16% excise duty on charges 16% excise duty on televisions, whereas it is 12% for PCs.televisions, whereas it is 12% for PCs.

• Similarly, televisionsSimilarly, televisions attract a 12.5% attract a 12.5% VAT rate, while it is 4% for PCsVAT rate, while it is 4% for PCs

• 12% growth rate, achieved despite 12% growth rate, achieved despite the constraints of an inverted the constraints of an inverted customs duty structure and high customs duty structure and high levels of excise duties levels of excise duties

Financial StatementFinancial StatementPeriod EndingPeriod Ending 31-Mar-0931-Mar-09 31-Dec-0831-Dec-08 30-Sep-0830-Sep-08 30-Jun-0830-Jun-08

DescriptionDescription Amount(Rs. million)Amount(Rs. million)

Net Sales / Interest Earned / Net Sales / Interest Earned / Operating IncomeOperating Income 2214422144 2074720747 2626026260 2612926129

Other IncomeOther Income 6262 6060 5151 7575

Total IncomeTotal Income 2220622206 2080620806 2631126311 2620426204

ExpenditureExpenditure -18063-18063 -17077-17077 -21611-21611 -20778-20778

InterestInterest -1556-1556 -1495-1495 -1106-1106 -1019-1019

Profit Before Depreciation Profit Before Depreciation and Taxand Tax 25872587 22352235 35943594 44074407

DepreciationDepreciation -1482-1482 -1380-1380 -1239-1239 -1257-1257

Profit before TaxProfit before Tax 11051105 854854 23552355 31513151

TaxTax -375-375 -250-250 -600-600 -600-600

Net ProfitNet Profit 730730 604604 17551755 25512551

Equity CapitalEquity Capital 22932293 22932293 22932293 22932293

Basic EPS after Basic EPS after Extraordinary itemsExtraordinary items 33 33 88 1111

Diluted EPS after Diluted EPS after Extraordinary itemsExtraordinary items 33 33 77 1111

Nos. of Shares - PublicNos. of Shares - Public 3968439639684396 4199401841994018 -- 4273846142738461

Percent of Shares-PublicPercent of Shares-Public 1717 1818 -- 1919

Operating Profit MarginOperating Profit Margin 1919 1818 1818 2121

Net Profit MarginNet Profit Margin 33 33 77 1010

Cash EPSCash EPS 1010 99 1313 1717

Market Share for Washing Machine Year 2007-2008

LG 22%

Samsung26%

Videocon16%

Whirlpool14%

Godrej16%

Others6%

Market Share for Televisions Year 2007-2008

LG 19%

Videocon22%

Samsung15%

Micr (Onida)13%

Others31%

Videocon at a glance:-Videocon at a glance:-

VideoconVideocon

Tie-ups with global leadersTie-ups with global leadersPartnerPartner ProductProduct Nature Of Tie-UpNature Of Tie-Up

Samsung ElectronicsSamsung Electronics Fly BackFly Back Technical SupportTechnical Support

Transformers, TunersTransformers, Tuners

Matsushita ElectricMatsushita Electric Washing MachineWashing Machine Technical * CollaborationTechnical * Collaboration

Matsushita ElectricMatsushita Electric Air ConditionerAir Conditioner Design & DrawingDesign & Drawing

Matsushita ElectricMatsushita Electric RefrigeratorRefrigerator Design & DrawingDesign & Drawing

Sansui Electric Co. LtdSansui Electric Co. Ltd Audio ProductsAudio Products ODM for Indian MarketODM for Indian Market

and Color TVand Color TV

TechneglasTechneglas Glass ShellGlass Shell Technical CollaborationTechnical Collaboration

AkaiAkai Audio ProductsAudio Products ODM for Indian MarketODM for Indian Market

and Color TVand Color TV

HyundaiHyundai Color TVColor TV ODM for Indian MarketODM for Indian Market

Electrolux AB SwedenElectrolux AB Sweden Refrigerator,Refrigerator, 1.ODM & Indian Market1.ODM & Indian Market

Air Conditioner andAir Conditioner and 2.Sourcing of components for Global 2.Sourcing of components for Global MarketMarket

Washing MachineWashing Machine 3.ODM for Global market3.ODM for Global market

Vision & MissionVision & Mission

• ““To delight and deliver beyond To delight and deliver beyond expectation through ingenious expectation through ingenious strategy, intrepid entrepreneurship, strategy, intrepid entrepreneurship, improved technology, innovative improved technology, innovative products, insightful marketing and products, insightful marketing and inspired thinking about the future.”inspired thinking about the future.”

Global locations…..more than Global locations…..more than 25000 employees.25000 employees.

Organization chartOrganization chart

Organization chartOrganization chartChairman

G.M

CEO

V.POps

V.PH.R

V.PMrkting

V.PFinance

V.PR&D

SalesMGR

AreaMGR

ADMGR

M.R ExeFridge

M.R Exe(W.M)

M.R Exe(T.V)

M.R Exe(A/C)

Hierarchy in Sales dept:-Hierarchy in Sales dept:-

Regional Manager (VP)Regional Manager (VP)

Area ManagerArea Manager

Sales ManagerSales Manager

Marketing executivesMarketing executives

Industry analysis, 5 force Industry analysis, 5 force modelmodel

• Michael porter’s 5 force modelMichael porter’s 5 force model

Competitive RivalryWithin an Industry

BargainingPower of supplier

Threat of Substituteproducts

Threat of newentrants

BargainingPower ofCustomer

Product Based SaleProduct Based Sale

• Videocon has product based specialized sales Videocon has product based specialized sales process.process.

• They have been innovating on the products on They have been innovating on the products on regular basis.regular basis.

• On a regular basis they come up with the consumer On a regular basis they come up with the consumer user friendly products at reasonable rates.user friendly products at reasonable rates.

• They have bagged awards pertaining to their They have bagged awards pertaining to their development on products like development on products like

– Their products have been certified by USA Their products have been certified by USA Laboratories for being compliant with international Laboratories for being compliant with international safety.safety.– Certification on products by VDE – Germany.Certification on products by VDE – Germany.– The products are CE approved for exportsThe products are CE approved for exports– The products are certified with British The products are certified with British Standards.Standards.– The products are got ISO 9002 quality The products are got ISO 9002 quality certification.certification.

Products Based Revenue Products Based Revenue FY 08FY 08

R & DR & D

• Videocon gives utmost importance to R&D Videocon gives utmost importance to R&D activities, which are carried out at in-house R&D activities, which are carried out at in-house R&D centre. This helps the company in cost reduction, centre. This helps the company in cost reduction, improving the quality, process implementation, improving the quality, process implementation, process control and product development. process control and product development.

• Specific areas in which R&D is carried out.Specific areas in which R&D is carried out. Home theatresHome theatres True flat televisionsTrue flat televisions Plasma televisionsPlasma televisions Manufacturing of components for CTV, fridge & Manufacturing of components for CTV, fridge &

A/C.A/C.

SWOT Analysis:-SWOT Analysis:-

Strengths:-Strengths:-• Largest distribution capacity and manufacturing base across Largest distribution capacity and manufacturing base across

India and a plant in China, Poland, Italy and MexicoIndia and a plant in China, Poland, Italy and Mexico• Videocon has a network of 400 plus service.Videocon has a network of 400 plus service.• Tie up with Mitsushita electric company Japan adds goodwill.Tie up with Mitsushita electric company Japan adds goodwill.• Strong backward integrationStrong backward integration• Large brand basketLarge brand basket• Multi brand stratergyMulti brand stratergy• Cheap priceCheap price• 33rdrd largest picture tube manufacturer in India. largest picture tube manufacturer in India.• Global acceptanceGlobal acceptance

SWOTSWOT

Weaknesses:-Weaknesses:-• Less investment on CTV, LCD & PlasmaLess investment on CTV, LCD & Plasma• Lesser margin to distributors/dealersLesser margin to distributors/dealers• Weak promotional strategy of CTV, LCD & Weak promotional strategy of CTV, LCD &

PlasmaPlasma• Less focus on unconventional channelsLess focus on unconventional channels• Poor after sales servicePoor after sales service• No exclusive showroomsNo exclusive showrooms

SWOTSWOT

Opportunities:-Opportunities:-• Going globalGoing global• Exploring new segmentExploring new segment• Growing semi-urban marketsGrowing semi-urban markets• Upward growth of the industryUpward growth of the industry• Growing purchasing power of the middle class Growing purchasing power of the middle class

segmentsegment• Mergers and joint ventures of strategic alliancesMergers and joint ventures of strategic alliances• Intense competitionIntense competition• Change in taste and trendsChange in taste and trends

SWOTSWOT

• Threats:-Threats:-• Entrance of global competitors like ChinaEntrance of global competitors like China• Brand loyalty is more of LG & other Cos.Brand loyalty is more of LG & other Cos.• Substitute products or servicesSubstitute products or services• Increased trade barriersIncreased trade barriers• Brand reputation is not that greatBrand reputation is not that great• Strong competitors like LG, Samsung, Sony Strong competitors like LG, Samsung, Sony

etcetc..

Marketing strategyMarketing strategy

• The 4A approach:-The 4A approach:-

• Availability (Place)Availability (Place)

• 1080 authorized service centres1080 authorized service centres

• 875 authorised service providers. 875 authorised service providers.

• 900 + sales and service dealers900 + sales and service dealers

• 26 mother warehouses26 mother warehouses

• 123 stock points123 stock points

Marketing strategyMarketing strategy

• Affordability (Price)Affordability (Price)

• Special prices offered during festive seasons Special prices offered during festive seasons and the lowest price in the marketand the lowest price in the market

• Product priced by middle class consumers in Product priced by middle class consumers in mindmind

Marketing strategyMarketing strategy

• Acceptability (Product)Acceptability (Product)

• Product localization as the key strategyProduct localization as the key strategy

• Regional language menus on its TVsRegional language menus on its TVs

• High quality product at lowest price in the High quality product at lowest price in the market.market.

• Established brandEstablished brand

• Upgraded features across its product lineUpgraded features across its product line

Marketing strategyMarketing strategy

• Awareness (Promotion)Awareness (Promotion)

• Mobile vansMobile vans

• Cookery classes to promote microwaveCookery classes to promote microwave

• Ads on television, print media etcAds on television, print media etc

• Exhibitions and road shows in rural Exhibitions and road shows in rural areasareas

• Festive season offers and discountsFestive season offers and discounts

Logistics ManagementLogistics Management

• 5R’s of Logistic:-5R’s of Logistic:-

• Right timeRight time

• Right placeRight place

• Right conditionRight condition

• Right costRight cost

• Right handlingRight handling

RecruitmentRecruitment

• Preferred qualification:-Preferred qualification:-• Any Graduate Any Graduate • BCA/MCA BCA/MCA • CA/ICWA CA/ICWA • BE/B.Tech/M.Tech BE/B.Tech/M.Tech • B.Com B.Com • M.Com with diploma in Materials Management from M.Com with diploma in Materials Management from

Indian Institute of Materials Management Indian Institute of Materials Management • MBA/PGDM in all streamsMBA/PGDM in all streams

RecruitmentRecruitment

Sources of recruitmentSources of recruitment

Internal:-Transfers

PromotionsUpgradingDemotion

Retrenched employeesDependents of deceased employees

External:-Press ads

Educational InstitutesPlacement agenciesEmployee referrals

Recruitment at factory gates

TrainingTraining

• Videocon believes its most valuable capital are its people. Videocon's Videocon believes its most valuable capital are its people. Videocon's main training centre in India is supplemented by other learning main training centre in India is supplemented by other learning resources strategically located around the globe. These offer advanced resources strategically located around the globe. These offer advanced programs designed to develop management and operational skills.programs designed to develop management and operational skills.

• Steps:-Steps:-• Periodic seminars and workshops for sales team as per their Periodic seminars and workshops for sales team as per their

designation and specialization required.designation and specialization required.• Books made available relating to different skills required to be Books made available relating to different skills required to be

possessed by the sales team.possessed by the sales team.• Various trainings and tests conducted on intranet.Various trainings and tests conducted on intranet.• Cross training Cross training • Tie-ups with universities and B-schools encouraging sales team for Tie-ups with universities and B-schools encouraging sales team for

further education.further education.• Before shift briefings to give information regarding any updatesBefore shift briefings to give information regarding any updates• Encouraging sales team to train other staff members which can Encouraging sales team to train other staff members which can

enhance hs confidence.enhance hs confidence.• Personality development workshops conducted periodically.Personality development workshops conducted periodically.

MotivationMotivation

• Weekend get away programsWeekend get away programs• Increments and promotionsIncrements and promotions• Gifts and contests for Sales teamGifts and contests for Sales team• Chance to attend the yearly CEO meet in Chance to attend the yearly CEO meet in

foreign locationsforeign locations• Rewards and recognition programs organized Rewards and recognition programs organized

every quarter on a grand levelevery quarter on a grand level• Incentives as per the targets achieved.Incentives as per the targets achieved.• Assigning leadership roles as per performanceAssigning leadership roles as per performance• Skill enhancement programs for the performers Skill enhancement programs for the performers

along with trips to foreign locations.along with trips to foreign locations.

AttritionAttrition

• Attrition rate is 23%, due to following reasons:-Attrition rate is 23%, due to following reasons:-• Lure of better pay: If skilled manpower is scarce, Lure of better pay: If skilled manpower is scarce,

professionals will inevitably be poached for higher professionals will inevitably be poached for higher salaries. salaries.

• Leadership crisis: Being a fairly new industry it does Leadership crisis: Being a fairly new industry it does not have too many established players. Hence, not have too many established players. Hence, there are very few veterans and worthy leaders in there are very few veterans and worthy leaders in top management positions. This presents a crisis of top management positions. This presents a crisis of leadership in smaller firms, which makes people leadership in smaller firms, which makes people move onto larger and more reputable companies. move onto larger and more reputable companies.

• Lack of understanding of PR: This may come as a Lack of understanding of PR: This may come as a surprise, but most people still have a very vague surprise, but most people still have a very vague notion of PR. notion of PR.

AttritionAttrition

Two main causes of attritionTwo main causes of attrition

Functional:-Retirement

Spouse job transferMajor health problemTo take care of sick

Preventable attrition:-Lack of job satisfaction

Stressful work environmentOutside influence

Conflict with manager

Thank youThank you