bajaj electricals fans group9 part1

MARKETING MANAGEMENT-2 PROJECT REPORT PART 1

Bajaj Electricals Ltd

Submitted To

Prof. Bhalender Singh Nayyar Department of Marketing FORE School of Management, New Delhi

Submitted By

Aayushi Singh (221002) Anvesh Reddy (221032)

Akul Sharma (221015) Dev Sharma (221040)

Divya Sharma (221043)

SUPER ENERGY EFFICIENT FANS

FORE School of Management Marketing Plan

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ACKNOWLEDGEMENT

We express our sincere gratitude to Prof. Bhalender Singh Nayyar, Department of Marketing, FORE

School of Management, for his encouragement, constant support and guidance. His support has

been invaluable in completion of the project part 1. We would also like to place on record the

sincere efforts taken by him in giving all minor details about the subject and express our heartfelt

thanks for the same.

We also thank FORE School of Management, New Delhi for providing us with an opportunity to work

on this great learning.


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Table of Contents 1. CORPORATE VISION AND STRATEGIES ............................................................................................ 5

1.1 Company Profile ...................................................................................................................... 5

1.2 Corporate Purpose .................................................................................................................. 5

1.3 Guiding Values and Beliefs ...................................................................................................... 5

1.4 Alignment with Present Strategies ......................................................................................... 5

2 MARKET ANALYSIS .......................................................................................................................... 6

2.1 PESTLE Analysis ....................................................................................................................... 6

2.1.1 Political and Legal............................................................................................................ 6

2.1.2 Economical ...................................................................................................................... 6

2.1.3 Social ............................................................................................................................... 7

2.1.4 Technical ......................................................................................................................... 7

2.1.5 Environmental ................................................................................................................. 7

2.2 Porters five forces .................................................................................................................. 7

2.2.1 Bargaining Power of Suppliers: (Low) ............................................................................. 7

2.2.2 Bargaining Power of Customers: (Low) ........................................................................... 8

2.2.3 Threat of New Entrants: (Moderate) .............................................................................. 8

2.2.4 Threat of Substitutes: (Low) ............................................................................................ 8

2.2.5 Industry Rivalry: (High) .................................................................................................... 8

3 INDUSTRY/COMPETITIVE ANALYSIS ................................................................................................ 8

3.1 Industry in which we compete ................................................................................................ 8

3.2 Favorable Industry Dynamics: India ........................................................................................ 9

3.3 Industry performance for last five years (FY 08 to FY 13) and projections for next three

years 10

3.4 Break-up of demand from urban and rural .......................................................................... 11

3.5 Market share of organized and unorganized for last year and projection for next three

years 13

3.6 Market share of Top Five players .......................................................................................... 14

Source: .......................................................................................................................................... 14

3.7 Review of the detailed marketing strategy for the top five brands ..................................... 15

3.7.1 Usha .............................................................................................................................. 15

3.7.2 Orient ............................................................................................................................ 16

3.7.3 Crompton Greaves ........................................................................................................ 16

3.7.4 Havells ........................................................................................................................... 16

Source: .......................................................................................................................................... 17


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3.8 SWOT for SBU ....................................................................................................................... 17

3.8.1 Strengths ....................................................................................................................... 17

3.8.2 Weakness ...................................................................................................................... 17

3.8.3 Opportunities ................................................................................................................ 18

3.8.4 Threats .......................................................................................................................... 18

4 PERFORMANCE REVIEW ................................................................................................................ 18

4.1 Past performance of the product ......................................................................................... 18

4.2 Elements of the marketing mix ............................................................................................. 19

4.2.1 Product .......................................................................................................................... 19

4.2.2 Price .............................................................................................................................. 21

4.2.3 Place .............................................................................................................................. 21

4.2.4 Promotion ..................................................................................................................... 22

5 SEGMENTATION, TARGETING AND POSITIONING ........................................................................ 23

5.1 Segmentation& Targeting ..................................................................................................... 23

5.2 Positioning............................................................................................................................. 24

5.2.1 Points of Parity: ............................................................................................................. 24

5.2.2 Points of Difference: ..................................................................................................... 24

5.3 Perceptual Map ..................................................................................................................... 25

6 OBJECTIVES ................................................................................................................................... 25


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PART 1

1. CORPORATE VISION AND STRATEGIES

1.1 Company Profile Bajaj Electricals Ltd (BEL) is an Indian consumer electrical equipments manufacturing company which is a part of the 380 billion Bajaj Group. Bajaj Electricals Limited has six strategic business units Engineering and Projects, Appliances, Fans, Luminaries, Lighting and Morphy Richards. Bajaj Electricals has 19 branch offices spread in different parts of the country besides being supported by a chain of about 1000 distributors, 4000 authorized dealers, over 4,00,000 retail outlets and over 282 Customer Care centres. Bajaj Electricals Limited is well established in a wide range of products such as lamps, tube lights, CFLs, luminaries, small household appliances, ceiling fans and table fans as well as turnkey engineering services. The company is also into Transmission Line Towers manufacturing and Rural Electrification. Bajaj Electricals Limited has received various accolades and awards for its Brand and advertising campaigns, one of them being the Gold Award for Readers Digest - Most Trusted Brands Awards received by Bajaj Lighting.

1.2 Corporate Purpose The Vision of Bajaj Electricals is We aim to bring greater happiness to our customers, through our products and services, while continuously enhancing stakeholder value.

Their Philosophy is based upon - "Trust builds Quality, Quality builds Satisfaction, Satisfaction builds Relationship, Relationship builds Trust, We believe in Inspiring Trust

1.3 Guiding Values and Beliefs 1) Build Trust: To conduct all business dealings with fair and ethical business practices and

strive to build trust in the minds of all stakeholders. 2) Belief in Excellence: To set high levels of Excellence in all actions and recognize and reward

the excellence achieved by team members. 3) Delighting Customers: To delight customers by providing them world-class products and

services and thereby enhance their quality of life. 4) Ensuring Accountability: To work in a transparent, performance oriented environment and

define clear accountability for employees, while empowering them to achieve their performance goals with speed and efficiency.

5) Encouraging Teamwork: To ensure dignity and respect for the individual while encouraging Teamwork.

6) Personal Growth: To enable every employee to learn at the work place with significant opportunities for Personal Growth and Contribution to the organization.

1.4 Alignment with Present Strategies Bajaj Electricals decades of experience in design, development and manufacturing with diversification into many segments and tapping sophisticated markets, has contributed to its present strategies of continuously innovating products and designs to enrich peoples lives and strive for a sustainable future by believing in inspiring trust with great people, excellence and quality of products.

The present strategy of the organization is very much aligned with its corporate purpose and guiding values:


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With focus on developing R&D centres to facilitate the requirements of all the divisions and reduce the duplication of work, they intend to synergise their in-house R&D strengths and scale it up in a big way which will integrate all the R&D activities across its various verticals under one roof.

They aim to provide quality, reliability and good value in the products they sell and services they offer. They are sensitive and responsive to changing customer needs right from product development stage to after-sales-service and with this aim to become market leaders in whatever they take up for marketing whether in restricted areas for certain products or on an All-India basis for others.

Their present strategy is to improve their profits by higher market share rather than by higher margin and to sell their products on the basis of technical superiority.

To address consumers and their complaints they have already established a consumer cell to take care of consumer complaints as also desired by the council for FAIR Business Practices.

Their strategy is aligned to address five groups of people namely suppliers, dealers, employees, shareholders and consumers with ethical practices and focus on quality.

They are actively involved in CSR activities through the many Trusts and Foundations the Bajaj Group has established.

They will continue launching more premium range of products targeting the affluent and the burgeoning middle class of the cities, however they feel it will be the first time users of appliances in small towns and villages that will power growth over the next decade.

Bajaj Electricals also plans to scale up its chain of exclusive retail outlets -- Bajaj Shoppe. They plan to expand their retailer network at about 10-15% p.a. All this is a part of their growth strategy of increasing retail footprint.

Their strategy is to enforce product innovation and distribution network at multiple price points which makes them unique and distinctive.

Tie-up with leading players to support exponential growth

Their focus will also be to develop appropriate rural strategy as the real growth in the next 10 years will come from a large number of consumers who are going to be first time users of appliances.

2 MARKET ANALYSIS

2.1 PESTLE Analysis

2.1.1 Political and Legal

The Fan Industry has to abide by the laws of Bureau of Energy Efficiency (BEE) which has been pushing the companies to invest in more energy efficient fans that consume less electricity.

The World Bank is providing $50 million to the governments Bureau of Energy Efficiency (BEE) to produce five million super-energy efficient fans that would help India save 100mw power every day.

Opening up of Indian economy to foreign players has led to increase in competition in the industry. Chinese fans available at low cost are difficult to compete with.

2.1.2 Economical

The spending habits of Indians are changing. Expenditure on appliances now has 6% share of total expenditure (FY12) as compared to only 3% share almost a decade back (FY01).


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Indias population base by income is transforming from a triangle with a large low income base into a diamond with large middle class population. The disposable income of people is increasing.

Even in the time of recession people dont cut their spending on fans as fans become necessary for survival in the summers.

Increase in the disposable income has led to increase in the organized retail sector in the fan Industry. People are ready to pay more for a quality product with warranty and good after sales services.

Increasing electricity prices has driven the demand for electricity efficient fans upwards.

Source of economic data Marketing Whitebook 2013-14

2.1.3 Social

There has been an increase in the number of nuclear families in India. Due to increase in the number of nuclear families the demand is increasing.

Although fan is a necessity in most of the parts of our country people have also started using these as a lifestyle symbol. Companies like Usha have launched super expensive range of fans.

2.1.4 Technical

The increasing electricity availability in the rural areas has been a major factor in increasing the demand for fans.

New emerging technologies include super energy efficient fans which provide the same amount of air for twice as much energy efficiency.

In addition to using technology to improve product designs, IT is being used to strengthen the supply chain by the companies and social media is being used extensively for promoting products.

2.1.5 Environmental

There is a constant pressure on companies to save and preserve environment. Companies are constantly working to reduce their carbon footprints. Companies are constantly developing green technology and are coming up with green home solutions.

Even the consumers have become responsible and prefer to buy those products which are least harmful to the environment.

Electrical appliances with 5 star rating are becoming the norm as saving electricity helps in preserving environment and also leads to low electricity bill for the consumers.

2.2 Porters five forces

2.2.1 Bargaining Power of Suppliers: (Low)

Given the large number of suppliers, they do not have much bargaining power with the limited number of premier market players. Also, the availability of imports at cheaper prices from other countries could also prevent the local suppliers from demanding higher prices.


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2.2.2 Bargaining Power of Customers: (Low)

Since most of the manufacturers offer same kind of products and varieties, customers can easily

switch from one brand to another. Also, as none of the market players have a strong hold on market

leadership, competitive prices are maintained in the market which gives the customer the freedom

to go for a particular brand he/she wishes. So though customer can switch from one brand to

another the price set by the company depends on the market and not according to will of customer.

2.2.3 Threat of New Entrants: (Moderate)

The technology requirements for setting up an electrical fan company are not much advanced, but

considering the recent mandates set by the government boards on the energy efficient standards, it

requires a reasonable capital to invest. Also, the stiff competition in the industry may prevent the

competitors from entering into the market.

2.2.4 Threat of Substitutes: (Low)

The unorganized sector has always been posing as a threat with almost 30% market share. But

considering the awareness among consumers on the quality levels, energy efficient products for

power saving, there has been a shift to premier brands. Hence, it can subsequently be eliminated as

a threat in the future course. Also there is no cheaper substitute of a fan for summers.

2.2.5 Industry Rivalry: (High)

There a fierce competition in the industry to distinguish their brands, which is resulting in

continuous product innovations in the design and technology. In effect, the market shares are

invariantly small and equally distributed among the top players themselves.

3 INDUSTRY/COMPETITIVE ANALYSIS

3.1 Industry in which we compete The Fan industry in India is estimated at a value of 4500 Crores. Out of this, the organized sector accounts for nearly 3500 Crores. The balance market is covered by the unorganized sector/ small scale industries. Ceiling Fans accounted for approximately 72% of the total demand for fans. The demand for Table, Pedestal & Wall Fans has risen faster than the segment of Ceiling Fans. Orient is a leading player in the segment of ceiling fans with 80% of its sales coming from ceiling fans. The Industry registered a lower growth of around 7% during the year. The industry continues to be fiercely competitive, with every major player vying for an increased market share. There is a clear shift towards the segment of premium fans, with a few leading players making a serious foray into this segment last year. Ceiling fans witnessed a modest growth of about 4%. Portable and Exhaust Fans segment showed a higher growth of around 10%. Reasons for low growth are attributed to a general slowdown in the economy, affecting particularly the Real Estate Sector


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and the low IIP performance in the year. Despite the low growth in the industry, Orient gained market share marginally in the year under review. The industry is likely to register a growth of around 10% per year in the near future. However, the demand pattern is gradually shifting towards premium and value added models which provide better realization and margins. We witnessed a delayed start to the season during last quarter of the year under review which could potentially provide an opportunity for higher sales in the first half of 2013-14. A few more players in the organized sector are planning to enter the Fan Industry. These Brands are major players in their present businesses and hence this could further increase competition within the organized sector. A significant growth of 14% could be achieved by the industry in Export of fans. Orient continues to be the largest exporter of fans from India with a share of more than 47% of Indias total exports.

Fan Industry for the year 2012-13

4500 Crore market. 3500 Crore organized sector and 1000 Crore Unorganized 72% demand of ceiling fans. Industry growth 7%.

3.2 Favorable Industry Dynamics: India

Paradigm shift in consumer buying behavior, driven by aspiration.

Branded over unbranded, organized over unorganized resulting in vast growth opportunity in branded electrical consumer products segment.

Increasing consumer/ end users engagement and usage experience driving quality and brand recall as key differentiator.

Select national brands, each centered towards product verticals. Housing growth, adequacy and quality of power key macro growth driver.


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3.3 Industry performance for last five years (FY 08 to FY 13) and

projections for next three years

Upsetting a nine-year-long growth tempo, the Indian fans industry recorded a fall in production of

3.13% and domestic sales of 3.35% in 2011-12. The industry was hit by a sluggish economy and high

inflation, with dismal realty off-takes adding to the woes. According to Indian Fan Manufacturers

Association (IFMA), the consolidated production of the industry was down to 36.22 million fans in

2011-12.

Post 2012,the production has grown steadily.

CAGR = 5.92 %

For an industry long considered as technology-stressed, where companies find it difficult to

differentiate themselves in the absence of upgradation and innovation, the 2008-12 period was a

momentous one. BEEs (Bureau of Energy Efficiency) voluntary standard and labelling program,

launched in 2009, single-handedly shook up the industry and forced players to infuse technology,

rework marketing campaigns and add new categories. As a result, there was a flurry of technology

addition all around. During 2009-12, manufacturers imported motor testing lines, air delivery

measurement systems and computerised testing systems for motor and stators to meet newly

defined parameters in air delivery, fan speed and power input.

Orient introduced energy-efficient fans under its Summer Crown brand in 2009-10 followed by Crompton Greaves (CG) in 2010-11.

Bajaj unveiled eight models (4 each in 4-star and 5-star category) in 2011-12.

FY09 FY10 FY11 FY12 FY13

Industry Trend 36 38.5 37 42 48

0

10

20

30

40

50

60

Mill

ion

s o

f U

nit

s

Industry Trend


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Net Turnover (in Crores)

Even after the negative growth, no measures have yet been taken by the Indian government to revive the Indian Fan Industry. The projected performance levels of the Indian Fan industry are based on the following facts that:-

There is an increasing demand for the electric fans in rural areas. Increase in the penetration of organized fan manufacturers into the rural markets due to the

efforts taken by the companies to increase the number of distributors. Increased number of varieties in the Lifestyle fans segments Increased brand awareness in both urban and rural markets due to increased advertisement

and better penetration of brands.

3.4 Break-up of demand from urban and rural In rural India, the ownership of fans is closely linked to power availability, especially in States where

disposable incomes are high. Although Punjab and Haryana are well-penetrated, Havells can benefit

from increased power supply and rising rural incomes in Uttar Pradesh, Rajasthan and Bihar, where

higher incomes have not yet fully translated into fan purchases because of power shortages.

Although the key beneficiaries of this trend would be companies that manufacture lower-priced

fans, we expect modern fans to capture the affluent households in these regions. Also, a ceiling fan

is almost a necessity in the hotter regions of India.

As per the findings of a survey conducted by Max New York Life and NCAER, fan ownership ranks

higher than ownership of manual water pumps and steel cupboards among rural households


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Rural India accounts for about 68 per cent of total households, but has penetration of only 55 per

cent in electric fans (91 per cent in urban). Poor access to infrastructure is a major deterrent to

raising penetration levels of these goods. This is especially of concern in rural areas where incomes

are expected to continue rising rapidly. Improved road connectivity raises demand for vehicles,

whereas power availability elevates demand for electrical goods.

*Source: The Great India Market, National Council of Applied Economics Research

The above figure shows that the demand for fans has been constantly increasing in rural areas, due

to improvement in various factors.

43.3

56.7

% Share in Stock of Consumer Demands (2009-10)

Urban

Rural


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3.5 Market share of organized and unorganized for last year and

projection for next three years

In the late 90s the unorganized market has a share of as much as 55% but gradually due to the better penetration of the organized players and increasing income levels of the Indian population the market size of organized players had increased to the current share of 78% in the entire market and hence the unorganized sector had a market share of 22% .

The share of Organized and Unorganized sector by volume of Fans produced as of 2013 *Source:- Orient Paper India Annual Report http://www.orientpaperindia.com/PDF/OrientPaper2012-13.pdf

The unorganized sector has been gradually decreasing from the past and this trend is expected to continue because of the factors such as:-

Increased penetration of the organized players. Chinese fans which are even cheaper than the unorganized sector. Rising raw material costs which the unorganized sector cannot afford to procure. Increasing brand awareness throughout India.

The growth projections for the coming years can hence be marked by a recovering and steadily growing upward trend.

78%

22 %

Market Share

organized sector unorganized sector

0

10

20

30

40

50

60

2012-13 2013-14 2014-15

Projected production of organised players(in Millions)

2012-13

2013-14

2014-15


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3.6 Market share of Top Five players The fan industry in the organized sector has the following major brands in India with no company

dominating the industry:

Company 2012-13 2011-12

Crompton Greaves 25% 24%

Usha 20% 19%

Bajaj 17% 16%

Orient 16% 17%

Havells 15% 18%

Others 7% 6%

Crompton Greaves is the market leader in fans followed by Usha and Bajaj. This trend has been like

this for past years. All the brands except Havells and Orient have gained market share. Usha is the

nearest competitor for Bajaj. Bajaj faces fierce competition from Orient who is just one percent

behind Bajaj.

Source:

http://www.superbrandsindia.com/images/brand_pdf/consumer_3rd_edition/Crompton%20Greave

s%20Fans.pdf

http://retail.economictimes.indiatimes.com/news/consumer-durables-and-information-

technology/consumer-electronics/usha-international-to-increase-exports-of-fans/27671707

http://www.thehindubusinessline.com/money-wise/stock-insight/bajaj-electricals-

buy/article5358435.ece

http://www.nseindia.com/content/corporate/eq_BAJAJELEC_base.pdf

http://www.thehindubusinessline.com/companies/havells-eyes-rs-1000cr-turnover-from-fan-

division/article4695770.ece

http://www.nseindia.com/content/corporate/eq_KHAITANELE_base.pdf


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Clearly, Crompton Greaves is leading the market with 25% market share which was also the market

leader in the previous year with 24% market share. Usha International is the second largest player in

the market with 20% market share which was in the same position in the last year with 19% market

share. Both the top two players have defended their market shares and have marginally gained a

market share of 1% each.

The next three players in the market are Bajaj Electricals, Orient Paper & Industries and Havells with

market shares of 17%, 16% and 15% respectively. As we can see, the competition in the market is

very intense and no company is leading the market with a substantial lead. Apart from these

companies, there are many small scale companies with a market share of 7% in the organized sector

which offer products with less prices, but their focus on quality is also less when compared to the

premier brands.

3.7 Review of the detailed marketing strategy for the top five brands

3.7.1 Usha

The company was the first one to launch BEE Star labeled ceiling fans in the industry. They were the first one to introduce the high-end decorative fan segment in the market.

They have also started making five star rated energy conserving fans. Usha had introduced Technix range of five star rated ceiling fans in the market which

consumes 43 watts only Usha International does not have manufacturing facilities and sources its products from Jay

Engineering Limited based in Hyderabad. Usha brand name is a household name in India (rated as the second most popular brand

after BATA by the AM survey.) The main sources of distribution for Usha are its company showrooms, franchises, and even

indirect retailers in various cities.

Crompton Greaves 25%

Usha 20%

Bajaj 17%

Orient 16%

Havells 15%

Others 7%

Indian Fan Market Share (2012-13)


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It has come up with major advertising campaigns and new launches. It introduced a lot of light weight ceiling fans made of ABS plastic. Ushas fans are of world class quality, consumer friendly and stylish. Its products has feature

like whisper quiet operation, precision crafted motor, wobble free operation and reversible motor.

3.7.2 Orient

Installed a state-of-the-art blade manufacturing plant in Faridabad. The plant has resulted in smooth supplies with minimal inventory levels, apart from reduced delivery lead time.

With the increasing demand for decorative premium range of ceiling fans, a range of value added models targeted at the premium segment were introduced with good acceptance in the market.

It has limited distribution in some parts in India. The company has undergone major advertising with its new range ORIENT-PSPO (Peak

Speed Performance Output) which enhanced companys market share as it is a provider of latest technology in fans.

The products are priced slightly higher than its competitors but has not lost its market share It has tie up with Mudra group for promoting their brands. Its contract with M.S. Dhoni as brand ambassador was renewed for another three years as

part of its brand promotion.

3.7.3 Crompton Greaves

The company's manufacturing units are located at Bethora and Kundaim, Goa, and Baddi, Himachal Pradesh.

Innovation and continuous upgrading of manufacturing processes are the company's twin distinctions. The production methods mobilize the most up-to-date technology and best practices in the industry.

On the technology front, Crompton Greaves developed the high speed low voltage (HSLV) fan motor to beat current fluctuations, endemic to power generation in the country.

It has been a pioneer in launching designer fans in Indian like fans fitted with decorative lamps and unique starting devices.

These fans are generally available at a premium price of Rs. 4,200 to Rs. 4,500. The company focuses on direct marketing for this range.

Crompton provides product information leaflets and catalogues at sales counters as its first point of contact, besides also dynamically displaying its range banners.

Channel partners are trained and armed to handle every conceivable query on models, performance, maintenance, utility and value-for-price considerations.

Sales promotion drives at the regional level ensure that Crompton fans can be seen on high-visibility locations such as front-lit hoardings, gantries, bus and metro panels, road shows and mobile vans.

3.7.4 Havells

Havells has a modern manufacturing plant for fans in Haridwar, Uttarakhand, with a manufacturing capacity of more than 5 million fans a year.

It offers premium fans with antique design, especially designed for kids and high speed fans. The companys fans offer good performance in low voltage too.

Its distribution network has the following objectives: o Tier II & Tier III towns to be the focus. o To reach 700 towns (from existing 500) reaching all towns upto 1 lac population. o Tier II/III relevant products like Reo would pull the growth of other categories as

well.


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o Galaxy showrooms to double from 200 to 400 covering 250 towns (against earlier 130 towns.)

o Galaxy now contributes 12% of non-cable business apart from a high quality brand visibility and direct consumer engagement.

o Greater relationship with retailers & electricians through "Power Plus" initiative. Current data base of 10,000 active retailers and 30,000 electricians. Significant growth to accrue this year with aggressive focus through dedicated in house group.

Source:

http://www.docstoc.com/docs/14509715/DOMESTIC-FAN-INDUSTRY

http://www.havells.com/Admin/SiteMedia/CompanyPdfs/Havells%20India%20July%202013.pdf

3.8 SWOT for SBU

3.8.1 Strengths

1. Strong Brand Image: Bajaj Fans is a well known fan brand leader, in the both ceiling and

pedestal fans category; Bajaj Fans leads the way and accounts for higher level of the total

market share. Bajaj Fans has one of the strongest portfolios of fresh air brands which are

trusted by consumers for its superior quality.

2. Innovation: Bajaj Fans leads in innovation within the fans industry. It invests almost double

the amount on innovation in comparison to its competitors and most of its organic sales

growth has been achieved through developing new brands and innovating products. It has

decades of experience in design, development and manufacturing

3. Consumer Understanding: Bajaj Fans invests more than its competitors in market research

and therefore is able to identify, understand and satisfy needs of its consumers around the

world.

4. Ability to reach market: Bajaj Fans has a good relationship with its retailers which it supplies

its brands to and retailers have equally ranked Bajaj Fans for years as a preferred business

customer (supplier). Bajaj Fans has established clear company strategies and leading

processes.

5. Large Scale: Bajaj Fans has benefited from many scale advantages because of its global scale

which includes the number of countries it serves, access retail channels, economies of scales

realized through increased savings from large purchases, shared services and knowledge and

diverse product portfolio.

6. Strong financial performance of Bajaj fans in the market

7. Diversified into many segments and tapping sophisticated markets

8. Has a strong workforce and good brand presence due to TVCs and print ads

9. Widespread distribution network

10. High performance products across all categories

3.8.2 Weakness

1. The brand has less penetration across international market

2. Market share is limited due to intense competition


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3. Less penetration in the rural markets

4. The company has limited options for the ceiling fan category as compared to the

competition

5. Bajaj Electricals does not offer any fan in the super expensive lifestyle category

3.8.3 Opportunities

1. Expansion through Strategic Alliances

2. Growth in its product line could increase demand

3. Population growth and urbanization is increasing the demand

4. Emphasis on in-house R&D for Technology Development

5. Focus on Technology Intensive Products

3.8.4 Threats

1. The unorganized sector for fans

2. Competition from private firms

3. Cheaper technology

4. Price wars

5. Cheap imported fans from China

4 PERFORMANCE REVIEW

4.1 Past performance of the product

The Fans Business Unit of Bajaj Electricals has a wide and attractive range of ceiling, portable, fresh-

air and industrial air-circulators and exhaust fans, in various sizes and colours, manufactured in

plants having ISO 9001/9002 quality certifications. During the past year, this BU has achieved sales

turnover of Rs. 611 Crores with growth of 11% and CAGR of 8% though the industry has recorded

only marginal growth. The BU has a market share of about 17%, and has even introduced star rated

ceiling fans. They have plans to introduce super energy efficient fans and few more models of fans in

the premium category. Bajaj Electricals Ltd has also tied up with Media, the worlds largest

manufacturer of TPW(Table, Pedestal, Wall) Fans.

According to Francis Kanoi Report 2012, Bajaj Fans is the best distributed fans, available in more

than 87000 outlets across the country, constituting 55% of Fans Selling Counters in the country. It

enjoys leadership position in 12 major states and is a dominant player in 6 other states in the

country.

It has been honoured by S.P. Jain Institute of Management Studies with Marketing Impact Award

2012 and the success story of this Fans BU has been published as a case study for MBA students.


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10 Year Financial Performance of Consumer Durables BU of Bajaj Electricals

*Source Bajaj Electricals Annual Report 2013

Their performance of the Consumer Durables Division which comprises of Fans has been constantly on the rise since the past decade as can be seen from their annual report. This division contributes to 48% of the companys total revenue. Electric Fans are a high market penetration product category and is very high in terms of purchase priority amongst durables. They have been doing well, due to the the consumer perception of Bajaj brand in the Electrical trade and also has a very strong all India logistics with a round 20 Branches and a strong after sales service infrastructure with around 200 Service Franchisees and a good synergy of its Appliances product lines in the channel, many of who also sell fans. Its Indirect Distribution Model has majorly contributed to the growth. Growth of Bajaj Fans has been higher than the Industry Growth in all the years except 2001-02. 2001-02 was impacted due to the high growth in the previous year and poor Institutional sales. The fan business is now on a self-sustaining profitable growth platform.

The substantial success achieved by Brand Bajaj Fans, whether it be in terms of the Sales Performance, Market share gains, Profit performance, Image improvements, Increase in Consumer Demand, Network related improvements, Dealer Loyalty and the overall Brand strengths, has been a vindication of their firm belief. The Fans BU has been a trail blazer within the company in terms of energising and electrifying Team Bajaj Electricals with its sterling performance and substantial achievements. In fact, the Fans have set an example for the rest of the company to follow and emulate.

4.2 Elements of the marketing mix

4.2.1 Product

Bajaj Fans was earlier focusing only on the premium segment of ceiling fans and was a niche player in the market. To have a dominating position in the fans market based on the strengths that company had in terms of brand, infrastructure, and management capabilities and understanding of the fans market, the company decided to target most of the segments in the fan market by following


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a micro-segmentation strategy. The Company believed that the Right Product at the Right Price Point for the Right Target Consumer was the Right approach to creating the Right Competitive Advantage.

Although Bajaj Fans decided to target nearly all the segments in the fans market, it was imperative to have a differentiation and concentrate on a set of customers in each segment, which will value the core benefit, which shall be offered by the Bajaj brand in each segment.

Existence of the product segments such as TPW and Freshair fans is largely necessitated by the desire to meet the customer needs in a price segment with a different product line i.e. a premium end customer can have a need for a ceiling fan as well as a TPW and Freshair fans. Therefore the Company decided to launch sub brands under the mother brand Bajaj to target each of the customer segments, segmented on the basis of price and launched a range of ceiling, TPW and exhaust fans under those sub brands for premium, economy and sub-economy segments.

The role of the sub brands was to create a differentiation in the mind of the consumer regarding the brand image. Thus, the image of the Crown sub-brand was built to appeal to the Premium Fan customer belonging to SEC A1, A2 and B1; whereas the Bahar sub-brand was aimed at the lower end customer.

4.2.1.1 Ceiling Fans

Under this category they have high quality decorative fans with better designs in the premium

segment. They also have high quality decorative and non-decorative but contemporary fans in the

Economy Segment corresponding to the consumer needs of this segment. Basic products without

any frills are also present to meet the needs of sub-economy segment aimed at providing an up-

gradation platform to the customer from the unorganised sector.

4.2.1.2 TPW Fans-

A range of TPW fans in the premium and economy segments are present.

4.2.1.3 Freshair Fans-

Freshair fans in the economy and sub-economy segments are available.

To bring the products in line with the positioning strategy the Revolutions Per Minute (RPM) of all

products was increased from 330RPM to around 400RPM to ensure higher Air Flow Velocity.

Introduction of multiple sub brands and products has been a key ingredient to the success of Bajaj

fans. Each sub brands signifies a specific customer expectation and the companys attempts at

meeting them. Very low focus has been given by customers to fan category as it is a low

involvement product and the decision maker is usually the male head of the family. Bajaj fans was

not even included in the consideration set under their decision making process earlier. That was the

major weakness. To eliminate that weakness they have come up with new strategies called umbrella

branding (family branding).

Few examples are - They launched the Bajaj Midea range of TPW fans in the premium segment, the

Crown range of TPW fans in the Premium segment, decorative & non-decorative fans in the economy

segment of ceiling fans - Grace, Grace Gold & Ultima, basic models with no special features in the sub

economy segment - Bahar & Maxima etc


21

Some of the current brands are Magnifique, Cruz, Euro, Elegance etc.The company has also launched a new range for Kids fans with Disney characters called Bajaj Disney Fans. These fans have the Mickey and Friends series as well as the Little Mermaid series.

4.2.2 Price

The company follows a competitive pricing strategy in all major markets for all product segments

The strategy to enter the lower price segments was executed through launch of differentiated

models aimed at the lower price segments. Earlier all Economy and Premium ceiling fans were sold

at around Rs.1000 and Rs.1200 respectively to the customer. Sub-Economy ceiling fans were

introduced at a customer price of less than Rs.900. The company introduced their Maxima ceiling

fans at a customer price of Rs.900 and Bahar ceiling fans at a customer price of Rs.800. The pricing

innovation aimed at the Bottom of the Pyramid mass market has been a key element of the Bajaj

Fans success story. According to the latest trend the company is launching separate brand ans range

for Rural India. Also the current price range of Bajaj Fans is from Rs. 1000 to Rs. 7700. The ceiling fan

price range is between Rs.1300 to Rs.3500

It also maintains cost based pricing policy- major weakness being high margins for distributors. That

has directly affected on their profitability because of high cost being incurred for distributors

margins. To save that cost company has started distribution of products by using their own vehicles.

4.2.3 Place

4.2.3.1 Mission Excel Initiative

The aim under this initiative was to understand the reach of Potential of the retailers of the

company in the total market and ensure presence and high shop share at key retail outlets, which

had a high share of the defined market. This enabled the Company to explore a larger part of the

defined market potential by being present in larger retailers counters in a stronger manner. This

activity lead to an improvement in both the width and depth of Distribution.

4.2.3.2 Retail Performance Standard (RPS)

The Francis Kanoi database was used to know the width of distribution of leading players in the

market. The leading player was benchmarked and a Retail Performance Standard was developed for

all markets, which were based on the ratio of our presence in the number of retail counters vs. that

of the benchmarked competitor. An action plan was developed and executed to ensure that Bajaj

brand gains an entry in the selected retail outlets where the benchmarked competitor was present,

so as to achieve the targeted RPS.

4.2.3.3 Change in Distribution Strategy

Bajaj decided to reduce the additional layers of distributors wherever feasible, which was increasing

the distribution costs for the company over that of the competitors. Instead a switch over was made

to the industry norm of supplying fans directly to major fans retailers and whole sellers and allowing

for adequate width of distribution as per the market forces.

Company -> Retailer -> Consumer

4.2.3.4 Separate Network for Sub-Economy fans

Bajaj has a parallel distribution network for the sub-economy fans, which comprises of dealers who

are primarily un-organised sector fan dealers. They as far as possible, do not offer the sub-economy


22

fans to its existing dealers of economy and premium fans. It also did not advertise the sub-economy

fans at all. The companys objective in introducing the sub-economy fans was clearly to take share

from the growing un-organised sector market while sustaining growths in the economy and

premium segments.

In the consumer durable market the consumer depends on the dealers recommendation for a

brand. Hence it was important to ensure that key dealers were encouraged to recommend Bajaj

Fans to the customer.

For this the Company ensures that:

- Attractive margins were given to dealers - An attractive and comprehensive range of products was offered - Efforts at gaining Dealer loyalty were undertaken

4.2.3.5 Dealer Loyalty

Since 2001 the Company has introduced a number of programs to increase dealer loyalty towards

Bajaj Fans, thereby encouraging them to recommend our fan over other brands, to the customer.

4.2.3.6 Direct Mailers

Khulja Sim Sim: The company identified some key retail counters across India & sent them mailers

directly from H.O. Branches were asked to open these counters directly or increase shop shares

through existing distributors. This was a first of its kind activity by any company in the Industry and

resulted in nearly 1000 responses.

4.2.3.7 Dealer Meets

Dealer and Sub Dealer meets were organised to gain their confidence share with them the

companys strategies and future plans and obtains their feedback on how to collectively grow in

volumes and profits. Most importantly such meets created a strong bond between the company and

its dealers and sub-dealers and made them feel an important part of Team Bajaj.

4.2.3.8 Retailers and Bajaj Shoppe

Bajaj Fans have 50000 retailers. They also have a concept of a Bajaj Shoppe. Few have been

inaugurated and rest are being rolled out for sale of Bajaj Appliances including fans.

4.2.4 Promotion

4.2.4.1 Television Commercials

Television has been used as the main media as it was important to create high aided and unaided brand recall related to the fans in the minds of the consumer. Fan as a product category has no major regional disparities in sale. Much of the sale of organised sector though is in the metro, Class I and Class II markets and the cable and satellite penetration in these markets is very high. It was therefore strategized by Bajaj Electricals to shift from the traditional way of promoting fans in print media to TV advertising through major C&S channels like Star, Sony and Zee.


23

TVCs of 10, 20 & 30 secs were developed based on a positioning Bajaj Fans Sabse Tez in Hindi and various regional languages such as Tamil, Kannada, Telegu, Malayalam & Bengali.

The Paper Weight TV Commercial won a Silver Abby for 2002 and has been widely acclaimed. The Door Closer press ad won a Silver Abby for 2002 and the Fish Bowl press ad won a Bronze at the International ADFEST at for Asia Pacific 2002.

4.2.4.2 Increased brand visibility at the market place:

They have initiated various Ground level activities by hiring promoters in key wholesale and large retail markets for fans. These promoters are dressed in branded T-shirts and caps and are asked to distribute leaflets of Bajaj fans to the potential customers and to detail the products at the Point of Sale.

When visiting the market, they carry placards with the core communication message of Bajaj fans Subse Tez. This has created a lot of excitement in the market and customers started asking for Bajaj fans.

Attractive POPs, Display schemes and Mystery Customer Contests are also run for the dealers for better display of products and packaging on the retail shelves by the retailers and for a Channel Push.

4.2.4.3 Publicity

An effective public relations campaign was also started to get favorable word of mouth publicity and

press coverage. The results have been quite encouraging.

5 SEGMENTATION, TARGETING AND POSITIONING

5.1 Segmentation& Targeting Bajaj Fans relies on the strengths of the company in terms of brand, infrastructure, management

capabilities and understanding of fan market. The company segments on the basis of Geography and

Income.

Geography: The segmentation on the basis of geography is based on the type of region like metros,

urban, semi urban rural. In addition to that cities and towns are further classified into tier 1, tier 2,

tier 3 etc.

Income: Income is another important parameter for segmentation. On the basis of income

customers are segmented into lower income class, middle class, upper middle class and high class.

Recently brands like Usha have started offering very expensive fans under its Usha Hunter brand

which caters to super premium lifestyle segment. Bajaj has no presence in this segment.


24

Age: Bajaj also segments consumers on the basis of age. It has a tie up with Disney for special fans

with Kids, which come in bright colors with their favourite Disney character printed on the blades of

the fan. For the mature audience Bajaj has more elegant design to suit their needs. In addition to

that Bajaj provides all kinds of fans, Ceiling fans, fresh air fans, pedestal fans, table fans and wall

fans. Bajaj fan has traditionally gone into micro-segmentation and targets every segment possible.

The company believes in launching right product at the right price for the right target consumer is

the right approach to create the competitive advantage.

We are launching a Super Energy Efficient ceiling fan which provides better air flow for the middle,

upper middle class and premium segment. We will be targeting consumers above the age of 25

years. The product offered will be a premium offering from Bajaj Electricals.

5.2 Positioning

5.2.1 Points of Parity:

Bajaj is comparable to all its competitors because it has all the basic characteristics that a modern

fan should have like power saving efficiency, wide range of varieties etc.

Bajaj brand of fans are priced competitively. They are not expensive and are in line with the offerings

of the competitors.

5.2.2 Points of Difference:

The point of difference that Bajaj takes advantage of is that it has a wide distribution network

compared to its competitors. Bajaj being one of the foremost player in this industry enjoys a wide

distributor network and brand awareness. It has developed a wide distributor network all across

India. Also, the point of difference would be the offering of being super energy saving and efficient.

The new product aims at positioning Bajaj Fans as the most super energy efficient fans available in

the market providing good airflow.


25

5.3 Perceptual Map

Bajaj* is where we want to reposition the brand

6 OBJECTIVES The outlook for the Industry is Positive. As of now the size of organized industry is 43.8 million units

and Bajaj Electricals stand at number three position with 17% Market Share. During the past year

this BU has shown growth of 11% and CAGR of 8%.

We think that by introducing Super Energy Efficient fans Bajaj will be able to attain a growth rate of

atleast 15% for the next year. This will make the market share of Bajaj close to 19%. Though the

Super Energy Efficient fans are a great concept and their demand should be much more we have

chosen this figure because it will take time to make people aware of this wonderful offering and

people are hesitant to switch to a completely new product. The sales generally need some time

before picking up pace.

Crompton Greaves

Usha

Bajaj

Orient

Havells

Khaitan

Super Fan

Bajaj*

Perceptual Map for Fans

High Energy Efficient

Hig

h A

ir F

low

Lo

w A

ir F

low

Low Energy Efficient


26

REFERENCES

1. Marketing Whitebook 2013-14 2. http://www.moneycontrol.com/insidecompanies/read.php?autono=646185 3. http://bajajelectricals.com/ 4. http://www.indiainfoline.com/Research/LeaderSpeak/Anant-Bajaj-Joint-MD-and-ED-

Bajaj-Electricals-Ltd./35797531

5. http://www.etstrategicmarketing.com/SmSept-Oct04/Strategic-Article10.html 6. http://www.bajajgroup.org/ 7. Bajaj Electricals Annual Report 2013 8. http://www.superbrandsindia.com/images/brand_pdf/consumer_3rd_edition/Crompto

n%20Greaves%20Fans.pdf

9. http://retail.economictimes.indiatimes.com/news/consumer-durables-and-information-technology/consumer-electronics/usha-international-to-increase-exports-of-

fans/27671707

10. http://www.thehindubusinessline.com/money-wise/stock-insight/bajaj-electricals-buy/article5358435.ece

11. http://www.nseindia.com/content/corporate/eq_BAJAJELEC_base.pdf 12. http://www.thehindubusinessline.com/companies/havells-eyes-rs-1000cr-turnover-

from-fan-division/article4695770.ece

13. http://www.nseindia.com/content/corporate/eq_KHAITANELE_base.pdf 14. http://www.docstoc.com/docs/14509715/DOMESTIC-FAN-INDUSTRY 15. http://www.havells.com/Admin/SiteMedia/CompanyPdfs/Havells%20India%20July%

202013.pdf

16. Orient Paper India Annual Report http://www.orientpaperindia.com/PDF/OrientPaper2012-13.pdf

17. http://consumeraffairs.nic.in/consumer/writereaddata/Ceilingfans-12.pdf 18. Rural Marketing in India: Challenges and Opportunities - International Journal of

Management and Social Sciences Research (IJMSSR) ISSN: 2319-4421 Volume 2, No. 8, August 2013

bajaj electricals fans group9 part1

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