consumer durables industry
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A
REPORT ON
CONSUMER DURABLE INDUSTRY
TABLE OF CONTENTS
1. Introduction……………………………………………………………
2. Television: CTV………………………………………………………
3. Refrigerator…………………………………………………………..
4. Air-conditioner……………………………………………………….
5. Washing Machine…………………………………………………….
6. Future Scenario………………………………………………………
7. Conclusion & Recommendation…………………………………….
8. Bibliography………………………………………………………….
INTRODUCTION
With Indian economy increasingly witnessing structural transformation from
a rural, agricultural one to more urban industrialized one, consumer durable
goods sector is fast emerging as an important segment of the economy.
Consumption of manufactured consumer goods is recognized as one of most
widely accepted measures of standard of living and quality of life. Consumer
goods manufacturing industry provides the driving force for stimulating
rapid economic growth. The growth rate of manufacturing and consumer
goods industry normally surpasses that of agriculture and service sectors. It
is for this reason that the manufacturing and consumer goods durable
industry is considered the backbone of economy.
BACKGROUND
Prior to liberalization, the Consumer Durables sector in India was
restricted to a handful of domestic players like Godrej, Allwyn, Kelvinator and
Voltas. Together, they controlled nearly 90% of the market. They were first
superceded by players like BPL and Videocon in the early 1990s, who
invested in brand-building and in enhancing distribution and service
channels. Then, with liberalization came a spate of foreign players from LG
Electronics to Sony to Aiwa.
Rs 23,000-crore consumer durables industry can be divided into two
types: consumer electronics and consumer utilities. Consumer electronics is
basically entertainment systems like television, VCRs, audio systems and
home theater systems. Consumer utilities are other household appliances like
refrigerators, washing machines, air conditioners, food processors, and
vacuum cleaners. On most third world countries, consumer durables like the
refrigerator and television are most popular. Out of these, the television
segment is undoubtedly the largest segment. Products in the white goods
segment come next to the CTVs in the purchasing hierarchy of the Indian
consumer.
Over the years, demand for consumer durables has increased with rising
income levels, double-income families, changing lifestyles, availability of
credit, increasing consumer awareness and introduction of new models.
Products like air conditioners are no longer perceived as luxury products.
According to Indian Readership Surveys (1999-2004) the following durable
categories have registered a healthy double-digit growth.
Source: Indian Readership Surveys (1999-2004)
Durable Categories Growth Rate (1999-
2004)
Television Sets 16%
Washing Machine 17%
Refrigerators 14%
While TV draws its share from both urban and rural refrigerators and
washing machines are still inclined towards urban.
Current Scenario
Most of the segments in this sector are characterized by intense competition,
emergence of new companies (especially MNCs), introduction of state-of-the-
art models, price discounts and exchange schemes. MNCs continue to
dominate the Indian consumer durable segment, which is apparent from the
fact that these companies command more than 65% market share in the
colour television (CTV) segment.
Steady growth of CE at 13-15% (’03–23%)
HA falling behind CE on account of growth
Steady growth of CE+HA - yet low penetration
INDUSTRY SIZE
Rs 23,000-crore consumer durables industry can be divided into two
types: consumer electronics and consumer utilities. Consumer Electronic
industry has a size of around Rs. 102 billion. The Indian television industry
has a size of around Rs 96 billion, comprising colour television (CTV) of Rs 91
bn and B&W TV market of Rs 5 bn and other markets (primarily video
equipment) of Rs. 4-6 billion. In terms of volumes, the CTV market was
estimated at 9.05 million units and the B&W TV market at 2 million units
during calendar year 2004.
Refrigerators constitute the second largest product segment within the
Indian consumer durables sector in India, with an estimated annual turnover
of Rs 39 bn during FY2005 with an estimated sale of 4.1m units.
The size of the room Air-conditioners industry is estimated at 1.1 m in
volume terms, and Rs 24 bn in value terms. Washing machines sales in India
aggregated an estimated 1.37m during FY2004 or around Rs 11 bn in value
terms.
MAJOR PLAYERS
The major players in the consumer durables industry, operating in
different sectors such as air conditioners, washing machines, refrigerators &
television: Blue Star Ltd., Mirc Electronics Ltd., Whirlpool of India Ltd., Philips
(India) Ltd., BPL Ltd., Sony Corporation Ltd., Samsung India Ltd., LG
Electronics India Ltd., Videocon International Ltd., Thomson Ltd. & Daewoo
Ltd.
DEMAND/SUPPLY
Supply growth is high across all the segments. But the organized sector
has gained substantial market share from the unorganized segment in recent
years. However, there are fewer players in segments like dishwashers and
vacuum cleaners.
Cyclical and seasonal. Demand is high during festive season and is generally
dependent on good monsoons. There are certain factors in the consumer durables
industry, which are considered as demand drivers. They are:
1. The degree of distribution network in the market.
2. The advertising and marketing strategy adopted by the players in
the industry.
3. The brand image of the product as perceived by the consumer.
4. The technology used by the company viz. state-of-art technology or
an older version.
5. The ability of the company to introduce newer products and newer
product features
6. The capability of the company to service its products 'The discount
schemes and consumer finance facility available
7. The market positioning of the product
8. The cost competitiveness and pricing strategy of the company
9. The financial strength of the players
CONSUMER DURABLE: URBAN & RURAL INDIA
1. In the top 5 million households, in affluence terms, 96 percent of
households have color televisions, 82 percent own refrigerators,
and 44 percent own washing machines.
2. In the next 7 million households, penetration of color TVs is 69
percent, 58 percent for refrigerators, and 19 percent for washing
machines.
3. In the next tier of affluent households - numbering approximately
12 million - 50 percent own color TVs, 35 percent own
refrigerators, and 8 percent own washing machines.
Rural India too is set to see an increase in the number of high-income
households. An additional 4.6 million high-income households and 13 million
middle-income households by 2006 to 2007 will take the number of rural
households from 122.8 million to 139 million. This constitutes a huge
opportunity for marketers - 60 million households or 300 million consumers
with the capacity to buy consumer appliances and other products is an
attractive market for any global player. And it seems that global appliance
players who have established brands in the Indian market are likely to benefit
from this great big push towards consumerism
SUCCESS FACTOR FOR CONSUMER DURABLE INDUSTRY
Indian consumer durables industry is going through a consolidation
phase with MNC companies going in for strategies to increase market share.
Certain success factors for this industry are identified as follows:
1. Technology: Rising competition has resulted in major competitors
introducing technologically superior products at competitive prices.
This means the technology input is gaining more and more importance.
In this regard, the large MNC players score over their Indian
counterparts as they can always source technology from their parents.
On the other hand, Indian companies rely on the outside sources for
their technology requirements.
2. Knowledge of the local market: Indian consumer durables market is
different from other markets. Hence understanding these peculiarities
is important for the long-term survival. For example, Samsung
launched the 'Super Horn" brand after it discovered that Indian
consumers prefer loud noise. Indian companies are better placed in
this regard as they know the market pretty well.
3. Strong distribution network: Tough competition means that a
proper mindshare of the consumer has to be maintained and the
product has to be made visible. Volumes in this business are narrow
and profitability comes from volumes. To achieve volumes, deep
penetration of the market is necessary. Indian companies score a point
here as being in the market for a longer time; they have developed
strong distribution channels.
4. Good brand image: Perception of a particular brand plays an
important role in purchase decision. A typical Indian consumer looks
for value for money when he makes purchase of white goods, as the
price involved is significant and unlike developed markets, Indians do
not have the buy, use and throw mindset. Hence, consumer also looks
for reliability of the product. All this is conveyed through strong brand
awareness.
Consumer Outlook: The Change in Consumer
India is a country in a hurry – changing continuously and also trying hard
to keep pace with these changes. The ‘me too’ syndrome is no longer valid as
consumers seek customized products. “The Indian consumer consumer’s
evolution in the last decade has thrown up some interesting trends:
1. Consumer base becoming younger. Nearly a third of the
country’s population is under the age of 14years.
2. Kids graduating from pester power to decision makers.
3. People with buying power living longer and developing
distinct health needs.
4. Multi-tasking consumers fighting paucity of time and new
consumer trends.
5. Huge increase in High Income Groups and spend now-save
later mentality leading to high disposable income.
6. Consume wants to be treated as an individual not as part of a
large physical mass and the consumer looks for a ‘post buy’
relationship to enhance the value of her brand decision
making.
NCAER’s The Great Indian Middle Class Survey: A few interesting
finding:
1. Total number of urban households will increase from 49 million
to 60 million by 2006 to 2007. The number of urban households
in the high-income group will increase by 8.6 million by the year
2006 to 2007, and by 7.3 million in the upper-middle-income
group.
2. By 2005-2006, the number of these rich households would
increase by 250per cent to 1, 40,000 by 2010. They are expected
to grow from 0.2% in 1995-96 to 1.7% in 2010.
3. Middle class will rise to 12.8%, from the current 2.8%.
This is the first time that NCAER has defined the middle class as having an
annual household income of Rs 200,000 to Rs 1 million. Many of these rich and
middle class households are located in rural areas and small towns too.
SWOT ANALYSIS: CONSUMER DURABLE INDUSTRY
STRENGTH WEAKNESS
o “Accessory to Necessary” Air-conditioners are no longer perceived to be a item of luxury.
o Advancement of technology which gives the companies ability to introduce new products and new product features.
o High Growth. Key drivers being Urban and Rural.
o Government Policies in favour of Industry includes infrastructure development, reduction in excise duty and so on.
o Supply continues to outstrip Demand. Demand Cyclical and seasonal.
o Volatile performance of the agricultural sector have a negative impact on demand. The sector's performance is highly dependent on monsoon and reforms, which has failed often.
OPPORTUNITY THREAT
o Diversification. Developing new products for new markets.
o Easy availability of finance has stimulated consumers to buy durables.
o Changes in Consumer Outlook from spend now-save later mentality leading to high disposable income.
o Dozen companies operating in the white goods segment. Prices would continue to remain depressed and margins will be under pressure.
o Threats of cheaper imports from China and other South East Asian countries
ENVIORNMENT ANALYSIS: PORTER’S MODEL
POTENTIAL ENTRANTS
MEDIUM
In the CE industry, although there are not prohibitively high costs of entry, the critical success factors are brand image, brand allegiance, and distribution networks.
INDUSTRY COMPETITORS
INTER FIRM RIVALRY HIGH
The Indian industry consists of players of domestic origin as well as multinationals. Of late, the multinationals have gained a sizeable presence in the Indian CE market at the cost of domestic players.
BARGAINING POWER OF BUYERS
HIGH
With the intensification of competition the bargaining power of the buyer has increased.
SUBSTITUTES
LOW TO MEDIUM
The consumer electronics (CE) sector is characterised by continuous technology advances that may result in substitution within the product
category.
BARGAINING POWER OF SUPPLIERS
LOW TO MEDIUM
Most of the raw materials are
available easily and in India. Some high-end raw materials such as larger-size picture tubes for flat TVs are imported.
TELEVISION: CTV
BACKGROUND
The television industry started in India in 1970 with the production of B&W TV
sets. The initial TVs were all 20-inch (or 51-cm) sets. For 13 years, this was the
only size offered in the B&W TV market, till 14-inch TVs were launched in 1984. .
The Government policy on B&W TVs in the initial period was characterized by
licensing of manufacturing units for capacity in excess of 10,000 per annum and
encouragement to the small sector industry (SSI) sector to set up production
facilities with capacities in the range of 2,500-5,000 per annum. The year 1983
saw the removal of restriction on capacity expansions and of the ceiling on
capacity to be licensed, although the restrictions on foreign technology
continued. A notable development was the launch of the 14-inch B&W TVs in
1984, which evoked an even better response from the market, especially since
they were affordable for households in the lower economic strata, in both rural
and urban areas.
The birth of CTV in India can be traced to the Asian Games (ASIAD) held in New
Delhi in 1982. After the ASIAD, Doordarshan Kendras were set up in many parts
of the country. The euphoria over cricket following India's victory in the
Prudential World Cup in 1983 and in the Benson and Hedges cricket
championship in Australia in 1985 (with the high-quality telecast of Channel
Nine) provided a great impetus to CTV demand. The Government encouraged
this sector, and various State Governments came up with their own TV
companies like Uptron, Keltron and Meltron. Older players in the B&W TV
market, like Weston, Dyanora and Televista, also diversified into CTVs. By
1989, there were around 200 players in the market.
The second phase of CTV growth came on the heels of the 1991-initiated
economic liberalization programme, after which there was a reduction in both
excise and import duties. Simultaneously, with the opening up of Indian skies to
foreign satellite channels in 1991-92 and the coming of cable TV, the demand for
TVs grew further. This was also the period when private and more aggressive
domestic players like Videocon, BPL and Mirc Electronics consolidated their
presence in the CTV market through their focus on both product promotion and
technology--the latter through collaborations with international bigwigs (BPL
with Sanyo, Japan, Mirc Electronics with JVC, Japan, and Videocon with
National, Japan). Since the mid-1990s, the Indian TV market has witnessed the
entry of global brands like Akai, Aiwa, Sansui, LG, Samsung and Toshiba. At
present, while LG and Samsung operate through fully-controlled Indian
operations, the Akai, Sansui and Toshiba brands are marketed by Videocon
(Akai was initially with Baron International, and later sold to Videocon). Aiwa is
now a subsidiary of Sony. The other multinationals (including Sony, LG,
Samsung) entered on their own and quickly captured the imagination of the
market with innovations in product quality and features.
INDIA V/S GLOBAL
The penetration levels of televisions in India is just 24% as compared with
98% in China, 11% in Brazil, 235% in France, 250% in Japan and 333% in US.
"In the west, the colour television is replaced after every 2-3 years, for
us Indians, the period of replacement varies between 10-12 years."
PLAYERS AND MARKET SHARE
The major brands in the Indian CTV industry are LG, Samsung, BPL, Onida,
Videocon, Onida, Sansui, Sony, Akai, Aiwa, Philips, Panasonic, Sharp, Thomson
and Daewoo. Competition has also intensified with Chinese consumer electronics
player Haier, German company G-Hanz and Japan's Hitachi having leaped into
the colour TV market. The companies marketing their CTV products under these
brands are as follows:
Company Brands
BPL Limited BPLVideocon International Limited Videocon, Akai, Sansui, Toshiba
Mirc Electronics Limited Onida and IgoSony India Private Limited SonyLG Electronics India Limited LGSamsung India Electronics Limited SamsungNational Panasonic India Limited/Matsushita Television and Audio Private Limited
Panasonic
Kalyani Sharp India Limited SharpThomson Consumer Electronics India Limited
Thomson
The Indian television industry has a size of around Rs 96 billion, comprising
colour television (CTV) of Rs 91 bn and B&W TV market of Rs 5 bn. The top four
players (LG, Samsung, Videocon group and Onida) have consolidated their
position. Today, they account for 69 per cent of the market, up from 43 per cent a
couple of years ago. Two or three factors have caused this change. BPL, once a
leader with over 20 per cent market share, has dropped to 5.2 per cent. Second,
multinationals brands like Sony, Panasonic, Thomson, and Sharp have lost
ground. Third, regional brands like Oscar, Texla, Weston, and Beltek have lost
market share. The reason behind this is that the consumer electronic and the
CTV market is characterized by continue innovation and use of state of art
technology which these companies have been unable to keep pace.
REFRIGERATOR
BACKGROUND
Refrigerators have been manufactured in India since 1950s. Till the 1980s,
players like Godrej, Kelvinator, Allwyn and Voltas controlled almost 90% of the
market. Earlier, the white goods sector was categorized as a luxury goods
industry and was subject to oppressive taxation and licensing. The situation
changed after the liberalization of the Indian economy in the early 1990s. The
government removed all restrictions, and now there is no restriction on foreign
investment, and licenses are no longer required. Post-liberalization, a number of
foreign companies entered the market and many domestic players also
diversified into refrigerators. BPL and Videocon who already had a presence in
the consumer electronics market, leveraged their strengths to enter the durables
sector.
In India, refrigerators have the highest aspirational value of all consumer
durables, with the exception of televisions. This accounts for the high growth
rate of the refrigerator market. Refrigerators are presently being manufactured
in two basic designs which are referred to as Direct Cool (DC) and Frost Free
(FF) refrigerator. The direct cool segment continues to dominate Indian
refrigerator market compared to more expensive frost-free models. The growth
in this segment though marginal, has been driven by factors like availability of
low priced models as due to competitive pricing and a growing middle class.
Manufacturers of refrigerators claim to have improved the quality of the product
particularly the reliability of the Compressor. In so far as new technology is
concerned, the concept of Frost Free refrigerator has been gaining popularity.
Capacity-wise also, there is a shift in Refrigerator Market. Till about two years
back, 165 Litres had a larger share and now units of capacity 185-300 Litres are
having increasing market share. Manufacturers are encouraged to adopt
environment friendly technology like usage of non-CFC (non- Chloro-Fluro-
Carbons) refrigerant based air conditioners, Non-CFC refrigerators are
manufactured in the country but because of their high initial cost, the demand is
somewhat sluggish.
INDIA V/S GLOBAL
The penetration of household refrigerators in India, the fifth largest consumer
durable in terms of penetration, is 13% compared to well over 90% in Malaysia,
Australia, Singapore, Hong Kong and Korea; around 80% in Thailand; close to 40% in
Philippines and China and 20% in Vietnam and Indonesia. When you compare the
annual commercial sales of HVAC and refrigeration equipment in the US at US $
200 per capita and in China at US $ 3 per capita with a dismal US $ 0.25 per
capita in India.
PLAYERS AND MARKET SHARE
The refrigerator industry has become highly competitive as a number of brands have
entered the market and the consumer has a wide choice.
Company Brands
BPL Limited BPLVideocon International Limited Videocon, Akai
LG Electronics India Limited LG
Samsung India Electronics Limited SamsungWhirlpool of India Ltd WhirlpoolGodrej & Boyce Mfg. Co. Ltd. GodrejVoltas Limited VoltasElectrolux Kelvinator Electrolux Kelvinator, Electrolux and
Allwyn
Refrigerators constitute the second largest product segment within the
Indian consumer durables sector in India, with an estimated annual turnover of
Rs 39 bn during FY2005 with an estimated sale of 4.1m units. According to FICCI
Survey April-March 2003-2004 Whirlpool and Godrej are the top two players
with market shares of 27 per cent and 20 per cent respectively. Electrolux
Kelvinator and LG compete for third and fourth position with market shares of
16 per cent and 14.5 per cent respectively. Videocon (11 per cent), Samsung (6),
BPL (4), Voltas and Akai are other significant players.
AIR-CONDITIONER
BACKGROUND
In 1902, Dr. Willis Haviland Carrier invented and secured the patent for a
weather control concept - air conditioning. Ever since, life hasn't been the
same. The air-conditioner market is hotting up as more and more people
appear to be convinced about the comfort of an air-conditioner (AC). The
extremely hot summers have stirred the demand for ACs and the industry is
experiencing a significant change.
Types of Air-conditioner Air
conditioning products are divided into Non Ducted products & Ducted
systems .The Non Ducted products are divided into two parts: window ACs &
the mini splits. The ducted systems are divided into central plants, packaged
ACs, ducted ACs. Window ACs account for about 54% of the total market for
ACs with an estimated market size of about Rs20bn.
Room air conditioners operate on electricity or gas and are enclosed in a
single cabinet. They blow the conditioned air directly into the room and do
not have air ducts leading to and from them. The three chief types are
window air conditioners, consoles and self-contained air conditioners.
Window air conditioners fit into the lower part of a window and can be
moved from window to window and thus the name, Window ACs. Self-
contained air conditioners are the large room air conditioner. Central air
conditioners also use electricity or gas. They can supply conditioned air to a
number of rooms or to an entire building from one central source. Fans blow
the conditioned air through air ducts from the air conditioner to the rooms.
Central conditioners have a number of advantages over other kinds. For
example, all the equipment for air conditioning a large area is located in one
place. This reduces the cost of cleaning and repairing. Central conditioners
can also be zoned i.e. they can supply air of different temperature to different
parts of a building.
INDIA V/S GLOBAL
According to Refrigeration and Air-conditioning Manufacturing Association
(RAMA) the penetration of household Air-Conditioners is abysmally low in
India at around 2% compared to 20% in Indonesia, 24% in China, 40% in
Thailand, 45% in Malaysia.
PLAYERS AND MARKET SHARE
The size of the room Air-conditioners industry is estimated at 1.1 m in
volume terms, and Rs 24 bn in value terms. According to FICCI Air
Conditioners (AC) it reveals that Indian AC industry, which has mainly
dominated by players like Carrier and Voltas, has been taken over by the new
MNCs in the last few years. AC market is dominated by four major players—
LG, Voltas, Carrier and Samsung.
LG is the market leader with a market share of 29 per cent followed by Voltas
(11) and by Carrier and Samsung (9.2 each) in addition to other players like
Hitachi and Videocon.
Company Brands
Mirc Electronics Limited OnidaVideocon International Limited Videocon
LG Electronics India Limited LGSamsung India Electronics Limited SamsungWhirlpool of India Ltd WhirlpoolGodrej & Boyce Mfg. Co. Ltd. GodrejVoltas Limited VoltasElectrolux Kelvinator ElectroluxBlue Star India Ltd Blue StarDaikin industries, ltd. Daikin
WASHING MACHINE
BACKGROUND
Washing machines as a consumer durable product has been in existence in India
for the last 10 years. During the last few years, in the Consumer Durable Sector
the market for Washing Machines has grown quite fast. The washing machine
market consists of two broad segments - semi-automatic and fully automatic. The
first accounts for a chunk of the market. In terms of loading type, top loading
machines sell in greater numbers than front-loading ones. In this industry, it is
the fully automatic segment, which in recent times has been getting the attention
of the users as more and more households have both partners working.
Consequently manufacturers have started paying more attention to this segment
and have started introducing more features in their products. The customers
now have a wide range of world class brands to choose from.
Major growth is projected to take place in fully automatic segment, which
accounts for above 23 per cent of the total market to about 30 per cent.
There is also a trend for purchasing smaller machines in the range of 3 to 4 kg.
capacity as compared to larger machines as there are more and more nuclear
families rather than joint families. In regard to emerging new technologies in the
washing machines sector mention may be made of aero power, triple cascade
tornado wash, digital intelligence, unique optical sensor and other such
innovations and adaptations which are gradually being introduced by the
indigenous manufacturers. Fully automatic machines are gaining popularity with
the change in lifestyle of consumers, increase in income, increase in number of
working couples, and due to price competitiveness.
INDIA V/S GLOBAL
The penetration level of Washing Machine is relatively low in India as
compared to global due to many reasons. Many housewives in less affluent
households prefer to wash clothes themselves rather than invest in washing
machines. Water scarcity in many Indian cities and timely availability is another
major issue. However, it foresees that penetration of washing machine will rise
by more than 6 per cent in the next two years.
PLAYERS AND MARKET SHARE
The refrigerator industry has become highly competitive as a number of brands
have entered the market and the consumer has a wide choice. Some of the
company and their brands are as follows:
LG Electronics has registered a remarkable growth of 36 % in the Washing
Machine Segment in H1 The Fully Automatic Washing Machines segment has
recorded a remarkable performance where volumes have grown by 22% and
value by 25% .Here again LGEIL happens to be the undisputed leader with a 30.7
% market share in Fully Automatic Washing Machine and 33.7 % market share in
Semi Automatic Washing Machine . (Source: ORG-GFK, May 2004)
Company Brands
Mirc Electronics Limited OnidaBPL Limited BPL
LG Electronics India Limited LGSamsung India Electronics Limited SamsungWhirlpool of India Ltd WhirlpoolGodrej & Boyce Mfg. Co. Ltd. GodrejElectrolux Kelvinator Electrolux
FUTURE SCENARIO Rising rate of growth of GDP, growth in disposable income, improved
lifestyles, 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 makes future of consumer durable
industry beneficial will rise the expectation of consumer durable industry, While
the consumer durable market is facing a slowdown due to saturation in the
urban market, rural consumers should be provided with easily payable
consumer finances schemes. Rural India, which accounts for nearly 70 per cent
of the total number of households, has a two per cent penetration in case of
refrigerators and 0.5 per cent for washing machines, offers plenty of scope and
opportunities for the white goods industry. By the industry itself the rural
market is growing faster than the urban India now. The urban market is a
replacement and up-gradation market now.
Unleashing of Consumer Durable Industry
In TV segment, the 14, 20 and 21 inches segments are expected to be the
key contributors to the overall industry growth. In the air conditioner
segment, room air conditioner market is growing at the rate of 18% per
annum. Majority of the companies, understandably, have plans to focus on
these segments.
Domestic AC manufacturers plan to beef up their distribution and service
networks, while MNCs will leverage on their brands and invest in high-
powered advertising. Given the fact that household penetration of ACs in
the country is very low (0.5%), growth potential is enormous. As running
costs of the AC are very high, manufacturers plan to introduce energy-
saving models in future. Demand for ACs in the long run will be robust due
to rising income levels and also due to higher computerization. Besides, air
conditioners are no longer perceived as luxury needs.
As per NCAER (one of the premier economic research agencies in India),
the penetration of TVs is expected to increase almost three times by FY07
as compared to the FY99 level. Growth in even higher for other durable
items like refrigerators and washing machines. The expectations are also
on the premise that the consuming class, as a percentage of total
households, is expected to grow at a faster rate. This would benefit the
consumer durable manufactures.
'000*)
1998-99 2006-07
Category Rural Urban All India
Rural Urban All India
TVs (colour) 48 304 121 185 723 347
Refrigerators 35 335 120 65 717 262
Washing machines
10 167 55 20 399 135
Sewing machines
71 172 100 85 152 103
Source: NCAER, * households
As per CETMA, Consumer Electronic plus Home Appliances is expected
at 15-20% next five years.
CONCLUSION AND RECOMMENDATION
It Contributes more than 5.5% to index of Industrial Production and provides
jobs to lakhs of professionals, Skilled, Semi Skilled and unskilled workers,
particularly women. It improves the quality of life of people by providing
Entertainment / information / education / comfort and helps reduce daily
chores, particularly for housewives. But the importance of the sector in
National Economy remains unnoticed.
"Low Penetration means opportunity: The consumer electronic and
home appliance which forms the part of consumer durable industry is
categorized by low penetration. Television, Refrigerator and Air-
conditioner have penetration of 24%, 13% & 2% respectively. This
means huge opportunity and untapped market.
Problem Areas: Some of the reason Attributable to Industry are as
follows:
Inadequate stress on R&D
Quality - Yet an issue
After Sale Service & Customer Satisfaction
Action for Industry for Growth
Commit sufficient resources for R&D
Need to be more quality conscious
Need to improve After Sales Services
Need to Build economies of Scale
Explore exports as a viable option.
More emphasis to develop Rural Market.
BIBLIOGRAPHY
Business World : The BW Mega Consumer Satisfaction Survey
Impact Magazine
Internet
www.indiainfoline.com
www.blonnet.com
www.etstrategicmarketing.com
www.lge.com
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