By Vijay Great Lakes Institute of Management

1) Indian Climate Control Industry

2) About Us

3) Our Current Strength

4) SWOT

5) Business Plan

6) Environmental Analysis of Air Conditioning Market

7) Market Survey

8) Targeting Segment

9) Our Strategy

10) Positioning

Content

Climate Control directly refers to the process /mode of reducing the effect of climate

to make the human & material comfort.

Basic Technique to achieve this is called HVAC ( Heating, Ventilation & Air

Conditioning)

Industrial Segment– catered by Chillers & Air Handling Units

Commercial Segment- Catered by Ductable Splits

Residential Segment – Catered by Window/ Split AC

Air Conditioning Penetration in India (4%) is very low when Compared to other

developing countries like china ( 53%)

Air Conditioning Penetration is very Low (3%) in Middle Income Household when

Compared to other White Goods like TV (77%)

2

4

3

1

5

Indian Climate Control Industry

Indian Climate Control Industry Climate

Voltas

20%

LG

20%

Pansonic

15%

Daikin

12%

Hitachi

7%

Others

26%

BEE has upgraded the Energy Standard of Split AC

to higher level in line with energy Conservations.

R22 refrigerant being replaced by R410A to reduce

the green house effect.

New Technology are emerging to Fulfill the Consumer Needs like Energy efficient,

Health Conscious, Aesthetics, Operating Cost & Environmental Requirement.

6

7

9

Major Players

Split AC Variant Market Share is in Increasing trend ,

Captured almost 80% in 2013 % where as Window AC

Market Share is 20%

More Number of Players are Entering & Expanding in to Air Conditioning Market

to Capture the Untapped Market. Air Conditioning Market is expected to grow

CAGR of 13% (13~18)

10

8

Global leader in the manufacturing air-conditioning systems, founded in 1924

First Packaged Air Conditioner Introduced in Japan ,1951

World's first Variable Refrigerant Volume (VRV) system Introduced in 1982

Having strong Presence in Asia, North America & Europe

Daikin India is a 100% subsidiary of Daikin Japan, founded in 2002

Having superior technology solution for energy efficient air conditioning

Offering premium air conditioning solutions to the Indian Consumers

Captured 12 % Market Share in Very Short Period of time

Daikin

Global

Daikin

India

About Us

Multidimensional Overview

Mfg Plant Administration

Logistic Sales & Service

Finance Market Position

Net Sales – Rs 805 Crores

Investment in India – Rs 7,427 M

CAGR – 133 %

Market Share – 12 %

Serving Premium Market Segment

Daikin is India's No. 3 AC maker

Manufacturing Facility -1

Wide Range of AC Product

Branch Office- 11

Resident Offices- 13

Mother ware house- 4

Supporting Ware house- 17

Channel Partners-805

Authorized Service Providers-61

SWOT Analysis

• Manufacturing Facility in India

• More Localized Part

• Strong Logistic, Sales & Services

• Having Patented Technologies

• Indian Consumer Reminds us

Energy Efficiency Technology

• Multicultural Working Environment

• Communication Barrier

• Transfer of Technology

• Critical Parts are Knock down Parts

• Manufacturing Technology not in

India for Critical Process & Product

• Localization of Parts with Strategy

sourcing

• Commonization of Parts to reduce

the design cost

• Govt Policy on Retail Markets

• More no of Players Entering

• All players entering in budget

segment

• Brand Value may Reduce

• Stability of Govt.

Strength Weakness

Opportunity Threat

Business Plan

20% Market Share in 2015

20% Volume Growth in 2014

Environments Analysis

Increasing House Hold Disposable Income

Increase in Modern Housing & Multi storey Apartment. Demographic

Growing Middle Class especially in Tier 2 & Tier 3 cities

Growth in Retail Sectors & Easy Financial Option Economic

Consumer Perception is shifting from Luxurious to Need

Owning of Air-conditioning becomes social Status

Socia

Cultural

Energy Efficiency Consideration to Meet the BEE Requirement

Alternate Refrigerant to fulfill the Environmental Requirement Technology

Global Warming could be Driving Factors

Govt Policy Favoring towards the Retail Segment

Political -

Legal

1 Bundling Offer

2 Online Order

3 Visual Appearance : Look & Feel

4 Auto Features

5 Income/ House

6 No of Room

7 Preferred Brand & Reason

8 Bed Room Size

9 EMI Option Preference

10 Size of Family

11 Present Air Control System

12 Avg Electricity Bill

13 Discount Sales

14 How long staying in this City

15 Expectation from Air conditioner

Market Survey

Features

Convenien

ce

Life Style

Price

About Market Survey

Surveyed Conducted in 7 Major Cities, 15 Tier 2 Cities

& 10 Tier 3 Cities

10,000 Peoples were Covered

Targeted Annual Income Level Rs 75,000 to 10,00,000

Survey Covered both Existing Customer, Competitor

Customer & Alternative User

Price

Low High

Premium/Durability (VFM)

Low

High

Mitsubhishi

Daikin

Panasonic

Samsung/LG

Voltas

Haier

General

Onida

1 Ton AC , 3 Star Rating

Carrier

Base Variant

Our Current Position in Residential Air Conditioning

Gap

Daikin, Offering Premium Products To Premium Customer.

Haier And Onida are offering cheapest air conditioner to lower middle income

Indian consumers.

Market is highly Competitive due to global players like Samsung, LG Haier &

Indian Company Voltas.

It Is Very Clearly Evident That , Huge Potential is Still Untapped by most of the

Players in Budged Air Conditioner With Mid Level Feature.

Tapping this Segment can be achieved through low Manufacturing cost, Localized

Parts, Innovation in technology to differentiate the product from other low cost

product portfolio.

Our Current Position in Residential Air Conditioning

Cities

Tier 2 Tier 1

AC Penetration/Utility

Low

High

Delhi

28%

Mumbai

35%

7%

Chennai

Delhi

4%

Kolkatta

4%

Hyderabad

3 Bangalore 1 1 1 1

Pune Indore Nagpur Patna

Other

Cities

15%

Air Conditioning Penetration in Indian Cities

0%

60 %

Tier 3

Chennai Hyderabad Pune Madurai Patna

Gap Gap

Tier 2 & 3 Tier 1

House Hold Income

Lo w (< 75 Thousand)

High (>10 Lakhs)

Urban

Bangalore

Pre Urban

Mid (1.5 ~ 3 Lakhs)

30%

26%

21%

10%

3%

32%

27%

20%

7%

10%

3%

7%

House hold income Vs Indian Cities Vs Air Conditioning Penetration

80%

market

Share

AC -

20%

market

Share

Air Cooler

-17%

Market

Share

Air Condition Makers are Mostly Concentrated only on Metros & other Tier 1 Cities.

Most of the Players have neglected the Tier 2 & Tier 3 Cities like Patna, Indore, Nagpur,

Madurai, Tirunelveli due to wrong perception about the Profitability.

Consumers in this segment are more sensitive toward the price.

Pre Urban Areas Offer huge Opportunity, House hold Income of those areas are equal to

Urban areas. Air Conditioner Maker have captured only 20% of the Market share from these

pre urban which is having same potential as like Urban area.

These Segment peoples are showing more interest toward the cheaper alternative like air

cooler which cost around only 5,000/- . Minimum Price of the air conditioner is around

16,000/- which is far higher than air cooler.

Operating cost of the air cooler is only 1/10 of the operating cost of Air Conditioner.

Air Cooler have 17 % market share from these segment, clearly pointing out high elasticity

in the Indian durable Market.

House hold income Vs Indian Cities Vs Air Conditioning Penetration

Low Exposure in financial Options are also contributing Factors for slow Growth in these

segment. Financing Option in consumer durable only 5-7% of total revenues of 2012, but in

contrast, the automotive has benefited in large scale around 72% of total revenue through easy

financing option.

It is clearly evident that High Price , High Operating Cost & High Initial Costs are the

concerns for air conditioning market.

Low Prices air conditioner with affordable operating cost can be achieved through

Innovative & Existing technology like inverter for Efficiency Seeker & Health Conscious.

Easy EMI Options & Communication of Options for lower Middle income People

Sourcing Strategy to achieve low cost for Price Conscious consumers.

Increasing income & Changing Life style of people in Pre urban/Semi urban will offer huge

opportunity to promote the brand & increasing Market Share from 12 % to 20 % .

House hold income Vs Indian Cities Vs Air Conditioning Penetration

Gap Found in Tier 2 & Tier 3

Cities

Serving only Premium Consumer,

Gap Found in Budgeted Air

Conditioner

Semi Urban Middle Income House

hold is not focussed

Summary from Perception Mapping

Business Strategy

Market Penetration with New Product

Easy Finance Option

Target New Customer Segment

Business Strategy

Target New

Customer

Segment

Business Strategy

Targeting Segment –Middle Income family,

– Age of 20~ 35 & Family Size of 3 ~4.

Targeting Market – Tier 2 & Tier 3 Cities

Targeting Product – Air Cooler Market

Market

Penetration

with New

Product

Targeting Existing Market by Introducing New Product

Repositioning of brands from Premium to Value for Money

Establishing the Product as all Season Product

Easy

Finance

Option

Easy Emi Options to target Pre Urban Consumers

Communication of Financial Options through Ads

Tie up with Leading Financial Institutions

Positioning

Home Appliance ^ HELPING CONSUMERS BUY THE APPLIANCE BASED ON NEED, FUNCTION AND STYLE

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Introducing Pure Air

Conditioners at your Budget

Energy

Efficient Eco

Friendly

Anti

Bacterial

User

friendly

3D

Air flow

Category Membership

Physiological Positioning

POD - Attitude

Pop- Category

Positioning