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The consumer electronics industry has witnessed a phenomenal growth over the past few
years. This growth can be attributed to the increasing effect of state of the art electronic
devices on the market. The consumer electronics industry is ushering in the dawn of
Convergence. It is the confluence and merging of hitherto separated markets of digital-
based audio, video and information technology, removing entry barriers across the
market and industry boundaries. This convergence of technologies has resulted in a
greater demand for consumer devices, be they portable, in-home (mobile phones, digital
camera) or in-car (CD/DVD players), offering multiple functions.
The revolution brought about by Digital technology has enabled the consumer electronics
sector to profit from the growing interaction of digital applications such as: camcorders,
DVD player/recorder, still camera, computer monitor, LCD TV etc. It has also witnessed
the emergence of mobile telecommunications technology, incorporating both digital
visual and digital MP3 capabilities. The computer industry has also benefited by being
able to make its way into consumer's living rooms. HDTV's with VGA connections and
SD/MMC card slots, personal media players, and Microsoft-based Media Center PCs
have pushed the two industries even closer together than before.
The overall revenue earned through the sale of audio, video and gaming consoles
constitutes the international consumer electronics market. The global sale of consumer
electronics is estimated to exceed all expectations to touch an all time high of $135.4
billion in 2006, which indicates 8% increase from 2005. By the year 2008, sales are
forecasted to soar up to $158.4 billion, up BY 65% over 2000.
The Asia Pacific region is the market leader wielding the biggest chunk of the market,
closely followed by Europe. The European market share is expected to take a drubbing
due to the growing demand for consumer durables in the Asia Pacific consumer
electronic market. Japanese companies have captured the consumer electronics market.
World famous brands such as Sony, Panasonic and Matsushita are all owned by these
Japanese manufacturers. Korean companies such as Samsung and LG are all trying to
join the Japanese bandwagon. Samsung can claim to be the world's fastest growing
electronic company.
Weaknesses
Opportunities
Threats
The smallest often have only one office with fewer than 50 employees focused on
one product.
In the middle are manufacturers that offer a range of products within a certain
category, such as speakers and audio accessories.
Industry observers usually break down the market by product category rather than
company size.
Consumer durables are items that provide a flow of services to a consumer over a
period of time. Examples include new cars, household appliances, audio-visual
equipment, furniture etc. The real level of spending on durables has surged in the last
eight years.
Falling prices for many durable products – arising from rapid advances in
production technology and the effects of globalization which means that we can
now import many of these durables more cheaply from overseas
Low interest rates which have encouraged people to spend more on “big
ticket items” – there has been a surge in demand for consumer credit
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Strong consumer confidence and borrowing levels. The demand for
consumer durables is more income elastic than for non-durables which are usually
staple items in people’s monthly budget.
Asia-Pacific region is the most lucrative area for the consumer electronics industry, as
most of the markets are still untapped.
Wi-Fi networking is expected to become a key enabler for the delivery and redistribution
of content in homes, particularly for retail consumer electronics hardware.
Mobile camera phone market has emerged as the single largest market for image sensors,
surpassing the entire consumer electronics segment, including digital still cameras
worldwide.
The strongest growth in consumer electronics segment is expected to come from China
by 2010, as the demand for consumer electronics is rising with the rapid pace of
economic development and low cost consumer electronics manufacturing.
On the back of this strong demand, China will become the second largest market for
consumer electronics, after US.
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Consumer Electronics Industry Analysis
Porter’s Five Forces Model
Although the Indian Consumer electronics market is highly competitive, the high growth
rates that it promises make it a good industry to enter.
In the case of retail stores, there is lack of good distribution network and lack of
knowledge of consumer buying patterns which calls for large investment in distribution
channels and research to improve the reach.
Economies of scale is required in as there are large fixed costs associated with setting up
a manufacturing plant as there are problems of under-developed infrastructure, erratic
supply of water and electricity in many areas, a high cost of capital and continuous up
gradation of technical and managerial skills.
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Supply Chain Issues:
The existence of too many intermediaries in the supply chain coupled with issues in
logistics, management of POS data, pilferage and distribution and inventory
management, eats away the profits of the retailer, making it unattractive for new entrants.
Product Differentiation:
Though the awareness is increasing amongst the Indian consumers, retailers and
manufacturers are unable to increase brand loyalty. The Indian consumer is very price
sensitive and hence he keeps hoping from one place to another, hunting for good deals.
Switching costs vary amongst the electronic categories. For instance, the switching costs
in mobile phones are high, as consumers who are used to one brand find it difficult to use
another brand. However, for televisions, cameras, and even laptops, consumers are ready
to try new brands based on price for features offered and service quality or reputation of
the brand.
Government Policy:
• The duty structure for electronics adds up to 30% which is a significant amount.
This is mainly due to the multiple tax structure which consists of 12% VAT, 8%
excise, 4% Goods and Service Tax, 2% Central Sales Tax and Local taxes.
• The FDI policy limits to 51% stake for foreign investors, which forces foreign
retailers to use franchise arrangements, and in the manufacturing sector, the FDI is
100% favouring foreign investors.
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• Existence of the grey market due to poor government regulations to keep
counterfeits at bay coupled with the lack of consumer knowledge and legal
recourse encourages manufacturers to churn out spurious products which can lead
to lost sales of the tune of 10-15%.
• Red tapes and bribery in the Indian government system is also a stumbling block
for new retailers or manufacturers.
Taking into consideration the positives and negatives, India still offers a good chance for
new entrants and hence the threat is considered to be low to moderate.
Large chain stores like Tata Croma, E-Zone have distinct advantage over the smaller
stand alone stores as they can demand good discounts suppliers. As brands play an
important role in the electronics market, the retailers find it difficult to integrate
backwards to produce their own electronic goods as in the case of private food labels.
Considering the market dynamics and the size of the market, the buyers have moderate to
high power in the consumer electronics industry.
Threat of Substitutes
The threat of substitutes for the manufacturers of these electronic goods is medium to
high unlike the case of white goods. As new technology enters the market at increasing
pace, the manufacturers and retailers need to understand the consumer needs. For
instance the VCR was replaced by the DVD player which will soon be replaced by a Blue
Ray Player. The incorporation of camera in the mobile phones is definitely a threat to the
camera market. Hence product innovations in this segment are very high and players in
this industry need to mindful of this.
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CONSUMER BUYING BEHAVIOUR
WHAT IS BUYER BEHAVIOUR?
The wealth of products and services produced in a country make our economy strong.
Almost all the products, which are available to buyers, have a number of alternative
suppliers: substitute products are available to consumers, who make decision to buy
products. Therefore a seller most of his time, seeks buyers and tries to please them. In
order to be successful, a seller is concerned with.
A buyer makes a purchase of a particular product or a particular brand and this can be
termed “ product buying motives” and the reason behind the purchase from a particular
seller is “ patronage motives”
When a person gets his pay packet, and if he is educated ,sits down along with his wife
and prepares a family budget, by appropriating the amount to different needs. It may
happen that after a trip to the market, they might have purchased some items, which are
not in the budget, and thus there arises a deviation from the budgeted items and
expenditure. all the behaviour of human beings during the purchase may be termed as
“buyer behaviour”.
1. Need/Want/Desire is Recognized
In the first step the consumer has determined that for some reason he/she is not satisfied
(i.e., consumer’s perceived actual condition) and wants to improve his/her situation (i.e.,
consumer’s perceived desired condition). For instance, internal triggers, such as hunger
or thirst, may tell the consumer that food or drink is needed. External factors can also
trigger consumer’s needs. Marketers are particularly good at this through advertising, in-
store displays and even the intentional use of scent (e.g., perfume counters).
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2. Search for Information
Assuming consumers are motivated to satisfy his or her need, they will next undertake a
search for information on possible solutions. The sources used to acquire this information
may be as simple as remembering information from past experience (i.e., memory) or the
consumer may expend considerable effort to locate information from outside sources
(e.g., Internet search, talk with others, etc.). How much effort the consumer directs
toward searching depends on such factors as: the importance of satisfying the need,
familiarity with available solutions, and the amount of time available to search.
3. Evaluate Options
Consumers’ search efforts may result in a set of options from which a choice can be
made. It should be noted that there may be two levels to this stage. At level one the
consumer may create a set of possible solutions to their needs (i.e., product types) while
at level two the consumer may be evaluating particular products (i.e., brands) within each
solution. For example, a consumer who needs to replace a television has multiple
solutions to choose from such as plasma, LCD and CRT television.
4. Purchase
In many cases the solution chosen by the consumer is the same as the product whose
evaluation is the highest. However, this may change when it is actually time to make the
purchase. The “intended” purchase may be altered at the time of purchase for many
reasons such as: the product is out-of-stock, a competitor offers an incentive at the point-
of-purchase (e.g., store salesperson mentions a competitor’s offer), the customer lacks the
necessary funds (e.g., credit card not working), or members of the consumer’s reference
group take a negative view of the purchase (e.g., friend is critical of purchase).
5. After-Purchase Evaluation
Once the consumer has made the purchase they are faced with an evaluation of the
decision. If the product performs below the consumer’s expectation then he/she will re-
evaluate satisfaction with the decision, which at its extreme may result in the consumer
returning the product while in less extreme situations the consumer will retain the
purchased item but may take a negative view of the product. Such evaluations are more
likely to occur in cases of expensive or highly important purchases. To help ease the
concerns consumers have with their purchase evaluation, marketers need to be receptive
and even encourage consumer contact. Customer service centers and follow-up market
research are useful tools in helping to address purchasers’ concerns.
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Customers make purchases in order to satisfy needs. Some of these needs are basic and
must be filled by everyone on the planet (e.g., food, shelter) while others are not required
for basic survival and vary depending on the person. It probably makes more sense to
classify needs that are not a necessity as wants or desires. In fact, in many countries
where the standard of living is very high, a large portion of the population’s income is
spent on wants and desires rather than on basic needs.
For example, in planning for a family vacation the mother may make the hotel
reservations but others in the family may have input on the hotel choice. Similarly, a
father may purchase snacks at the grocery store but his young child may be the one who
selected it from the store shelf. So understanding consumer purchase behavior involves
not only understanding how decisions are made but also understanding the dynamics that
influence purchases.
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TYPES OF CONSUMER PURCHASE BEHAVIOUR
Consumers are faced with purchase decisions nearly every day. But not all decisions
are treated the same. Some decisions are more complex than others and thus require
more effort by the consumer. Other decisions are fairly routine and require little effort.
In general, consumers face four types of purchase decisions:
For marketers it is important to understand how consumers treat the purchase decisions
they face. If a company is targeting customers who feel a purchase decision is difficult
(i.e., Major New Purchase), their marketing strategy may vary greatly from a company
targeting customers who view the purchase decision as routine. In fact, the same
company may face both situations at the same time; for some the product is new, while
other customers see the purchase as routine. The implication of buying behavior for
marketers is that different buying situations require different marketing efforts
However it should be remembered that the actual act of purchasing is only one stage in
the process and the process is initiated at the several stages prior to the actual purchase.
Secondly even though we find that purchase is one of the final links in the chain of
process, not all decision processes lead to purchase. The individual consumer may
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terminate the process during any stage. Finally not all consumer decisions always include
all stages. Persons engaged in extensive decision making usually employ all stages of this
decision process. Where as those engaged in limited decisions making and routine
response behaviour may omit some stages. The consumer decision process is composed
of two parts, the process itself and the factors affecting the process.
A survey conducted by the marketing team of shoppers stop Ltd. Reveals the
psychography of the modern shopper.
• Convenience Shoppers
• Value Shoppers
• Image Shoppers
• Experience Shoppers
Convenience shoppers for instance ,are people who consume relatively less amount of
time while shopping. Also they look out for the width and depth of the range they
purchase and conduct their annual shopping at one shot.
Value Shoppers always hunt for value for money ; Prefer quality reassurance and
benchmark offerings among other related attributes.
Image Shoppers are fashion- conscious and look out for the latest trends and labels.
On the other hand , Experience Shoppers are attentive and prefer personalized services
look out for the right ambience, prefer giving personal advice on clothing at the time of
purchase , and prefer not to buy at one sold.
2. Social practices
There are so many different cultures, and each culture exhibits different social
practices. For example, in a few villages they have common bath areas. Villagers
used to buy one Lifebuoy cake and cut it into smaller bars. This helped lifebuoy to
introduce smaller 75-gram soap bars, which could be used individually.
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MARKETING IMPLICATIONS OF CONSUMER’S
DECISION PROCESS
It was during 1960’s that a number of theories to explain the consumer ‘s decision
process started appearing. The three leading theorists were Howard-sheth , Engel Kollat-
Blackwell and Nicosia. Since then a considerable research on the marketing implications
of the process has been developed and tested the applications of many elements of
marketing.
Many of the marketing strategies and tactics will have to be developed in relation to
consumer attitudes. Marketing strategies,if effectively used, will go a long way in
initiating and developing consumer attitudes in favour of the products.
fear)
5. Love and affection : When you purchase toys, dresses for your sister, it is out of
affections.
10. Comfort and :Purchasing equipments like refrigerator, pressure cookers etc
Convenience
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Consumer Electronics Market
Rapid Innovation
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ECONOMIC FACTOR AFFECT THE BUYER’S
BEHAVIOUR
1. Disposal personal income :
The size of family and size of family income affect the spending and saving patterns.
Generally large family spend more and short family spend less, in comparison.
3. Income expectations :
The expected income to receive in future has a direct relation with the buying
behaviour. The expectation of higher or lower income has a direct effect on spending
plans.
This goes to the habit of spending or saving with the disposal income of buyers. If the
buyers give importance to present needs, then they dispose of their income. And buyers
spend less if they give importance to future needs.
5. Liquidity of Fund :
The present buying plans are influenced greatly by liquidity of assets i.e., cash and
assets readily convertible into cash, e.g. bonds, bank balances etc.,
6. Consumer Credit :
“ Buy now and pay later” plays its role effectively in the rapid growth of markets for
car, scooter, radio, furniture and the like.
• psychographics (lifestyle),
• personality, motivation, knowledge,
• attitudes,
• beliefs, and
• feelings.
• demographics,
Consumer behaviour concern with consumer need consumer actions in the direction of
satisfying needs leads to his behaviour of every individual depend on thinking process.
• culture,
• sub-culture,
• Locality,
• royalty,
• ethnicity,
• family,
• social class,
• reference groups,
• lifestyle, and
• market mix factors.
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Black box model
The black box model considers the buyers response as a result of a conscious, rational
decision process, in which it is assumed that the buyer has recognized the problem.
However, in reality many decisions are not made in awareness of a determined problem
by the consumer.
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A Consumer Electronics Association (CEA) study has found that women are more
comfortable with technology than ever before, are heavy users of CE products, and
have a major influence on technology purchases for the household.
Female customers are distinct in their beliefs about technology, in what they desire
from consumer electronics, and in the way that they shop for these products, the
study indicated.
Women are less enamoured of gadgets and technology for its own sake.
But the CEA study indicated that women are more open to advice, and when
shopping they focus on portability, functionality, reliability and simplicity.
BRAZIL
CHINA
INDIA
MEXICO
SOUTH AFRICA
The Top 5 Emerging countries contributed $37.6 billion to the global consumer
electronics industry in 2007, with a CAGR of 10.9% between 2003 and 2007
In 2012, the market is forecast to have a value of $51.2 billion, with a CAGR of 6.4%
over the 2007-2012 period.
China is the leading country among the Top 5 emerging nations, with market revenues of
$21.6 billion in 2007.
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The world’s fastest growing large economy, and foreign investors and market
High Competitive market, margins very tight and, until recently, the available
market was shrinking.
Presence of Rural rebate scheme for reduced price goods to rural consumers has
made the available market a lot bigger though, over the past few years.
Official estimates for the CNY(Chinese New Year 2009) period show sales of
household electric appliances grew by 17.8% over the same period in 2008.
CHINA DEMOGRAPHICS
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GLOBAL INDUSTRY POSITION
Support voluntary, market-oriented programs and initiatives, including industry-
led standards, which highlight and sustain energy efficiency in the electronics
industry
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Trends in Electronics Market
Propelled by growing middle class population, changing lifestyle and rapid urbanization, the
Indian consumer electronics industry is forecasted to grow at a rapid rate of 10% to 12% in
the coming few years.
Volume sales of washing machine will be driven by growth in fully automatic category during
2008-09 to 2011-12. The market for televisions in India is changing rapidly from the
conventional CRT technology to Flat Panel Display Televisions (FPTV). Currently, the split
between CRT and FPTV is around 97% and 3% respectively, and the share of FPTV is
projected to increase at robust rate in near future.
Frost-free refrigerator sales, certainly growing at a much faster pace than the direct-cool
category, are anticipated to drive the Indian refrigerators market over the forecast period.
The AC market in India is projected to grow at 30% to 35% for the coming few years.
Driven by young population, demand for MP3 players and digital video appliances are
anticipated to surge at double-digit rate in near future.
The low penetration level of consumer electronics goods coupled with increasing preference
for comfort and luxurious goods are widely attracting the foreign as well as domestic players
to the industry.
Lower duties, cheaper technology and strong competition with low entry barriers
ensure competitive prices
Huge boom in mobile phone purchases with high penetration even in rural markets
(launch of value for money, no frills, reliance phones gave an impetus to rural
penetration)
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With internet penetration also increasing along with growing number of service
providers, the sales of modems, routers and accessories has gone up.
Shift from buying predominately during Diwali and other festive seasons to year
round purchasing
More research is done on technically advanced gadgets, but there has also been an
increase in impulse buying with increasing disposable incomes, competitive prices
and wide choice.
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KEY PLAYERS IN ELECTRONICS AROUND THE
WORLD
COMPANIES PRODUCTS
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OVERVIEW OF INDIAN MARKET
Pre liberalization dominated by a few domestic players like Godrej, Allwyn,
Kelvinator, and Voltas
Post-liberalization many foreign companies have entered into India, dethroning the
Indian players and dominating the market
LG and Samsung, the two Korean companies have been maintaining the lead in
the industry with LG being the leader in almost all the categories
The rural market is growing faster than the urban markets but penetration level is
very low
CTV segment is expected to the largest contributing segment to the overall growth
of the industry
The report finds that since the penetration of several products like TVs and refrigerators
are reaching saturation in the urban areas, the markets for these products are shifting to
the semi urban and rural areas.
This analytical research evaluates the Indian consumer electronics industry. It briefly
discusses about the current and emerging trends in the industry, underlining the future
potential areas and key issues crucial for the industry development. It provides an insight
into the emerging and potential future trend in all the categories and highlights the key
strategies that need to be worked upon to get success in the highly competitive industry.
The report thoroughly analyzes the historic performance and future prospects, offering 4-
year industry forecast, of following consumer electronics products:
The Socialites
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Socialites belong to the upper class. They prefer to shop in specialty stores, go to clubs on
weekends, and spend a good amount on luxury goods. They are always looking for
something different. They go for high value, exclusive products. Socialites are also very
branding conscious and would go only for the best known in the market.
The Conservatives
The Conservatives belong to the middle class. The conservative segment is the reflection
of the true Indian culture. They are traditional in their outlook, cautious in their approach
towards purchase; spend more time with family than in partying and focus more on
savings than spending. Slow in decision making, they seek a lot of information before
making any purchase. They look for durability and functionality but at the same time is
also image conscious.
The working woman segment is the one, which has seen a tremendous growth in the late
nineties. This segment has opened the floodgates for the Indian retailers. The working
woman today has grown out of her long-standing image of being the homemaker. Today,
she is rubbing shoulders with men, proving herself to be equally good, if not better.
Working women have their own mind in decision to purchase the products that appeal to
them.
The Youth
The “rise of next generation” has been written about with unbridled optimism and
enthusiasm, based on the coming of age of liberalization children. They are global in their
worldwide view and have been exposed to enormous information unlike their parents,
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raised amidst a consumption-friendly and consumption encouraging social discourse.
They are expected to be at the forefront of creating a new, modern, west-embracing
consumer society, as well as yield the demographic dividend that will drive economic
growth
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Revolution in Indian Consumer Behaviour
• Convenience seekers
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Segment Definition
Out of the electronics industry in India, the consumer electronics segment is one of the
biggest markets. The consumer electronics industry comprises of communication devices,
computing devices, audio, video and gaming products. Televisions, music players, digital
players, cameras, laptops, PCs, mobile handsets and accessories, gaming consoles
commonly fall into the consumer electronic category.
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Consumer E
In 2008, the market size was estimated to be $22 billion and growing. With the growing
population in India, exceeding 1 billion, the consumer electronic Industry is all geared up
for fast growth in the coming years. The predicted figure for the consumer electronic
market by 2013 is around $46 billion, growing at a compound annual growth rate
(CAGR) of 16%. This astounding growth is due to many factors, the major ones
including
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Taking a look at the individual segments in the consumer electronics segment, we can
broadly classify them as:
Computers
According to Business Monitor India Report, the computers (laptops, desktops and
accessories) market took up a share of 33% of the consumer electronics wallet in 2008. It
also states that with the prices of PCs coming down by nearly half, the sales went up from
$5.8bn in 2008 to $6.0bn in 2009. It’s very interesting to note that the current PC
penetration is only 2% and this leads to excellent growth opportunities with a predicted
CAGR of 13% for the period 2009 to 2013.
The audio, video and gaming devices take up close to one – third of the wallet share in
the consumer electronics segment. This segment is set to grow at 22% CAGR from 2009
reaching US $15 in 2013. The main product in this group is Television, with new
technology such as Plasma TVs entering the market and cricket being the main attraction
for most Indians, the Indian Premier League, Common Wealth Games 2010 are all
helping in boosting the drive for upgrades.
Mobile Handsets
The largest chunk of the consumer electronic market goes to the mobile handsets and
accessories with 37% of Indian spending in 2008. With the telecommunication boom and
lower call rates, the handset market is poised to grow at 19% compounded annually and
reach a staggering figure of about 380 million units by 2013. The mobile penetration in
the rural market is 15% and is the most as compared to other categories. In the future,
most vendors will definitely target the 3 tier cities and rural customers
The main electronic manufacturers in the Indian market are Videocon Industries, LG
Electronics, Samsung, Onida, Panasonic India, Bose India, BPL, etc. The upcoming
players are D-Link, Samtel , WeP and Tyco followed by Nokia and Motorola.
L.G Electronics
The market leader in consumer durables is LG for close to a decade in India. They have
also been recognised for their superior innovation and after sale service. It is proud of
their distribution channels which offer its products to the breadth and length of India. As
early as 1998, LG with a budget of Rs500 crores set up manufacturing facility with a
Figure:
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Market Share of Electronics Manufacturers Source: Centre for Monitoring Indian Economy
state-of-the art technology at Greater Noida, near Delhi. L.G also has recently entered
directly into the consumer market by setting up retail shops and boast of retail sales Rs.
10,000 crores in 2008
Samsung Electronics
Samsung entered India in 2002 with an 80 acre sprawling facility at Noida and mainly
manufactures colour TVs, mobile phones and some white goods. Its manufacturing
facilities are best known for its high automation, high quality and state of art. Recently
they opened another unit at Sriperumbudur, near Chennai. This facility has an investment
plan of USD100 million starting from 2007, over a 5 year period .
Nokia, India
Nokia also set up its manufacturing plant in Sriperumbudur, Chennai in 2006, just taking
5 months to complete the entire factory construction. Starting with 550 people, it has
grown to a size of 8000 people today and employs 70% women. The manufacturing
facility, with a sprawling area of 200 acres, incorporates the best quality, high efficiency
and a great supply chain system.
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fans, mixers, irons, heaters and other household equipments. Till 1994, it had set up only
3 showrooms, however, with a strategic initiative for rapid expansion, it established its
dominance in the two states on Tamil Nadu and Karnataka with 51 showrooms covering
a retail space over 1,75,000 sq.ft and boasting of a group turnover of Rs. 400 Crores and
with wide product offerings. It plans of setting up of 50 more showrooms in south India.
Infiniti Croma
The Croma retail chain is owned by Infiniti Retail which is a Tata sons 100% subsidiary
and set up its first store in 2006, which was 20,000 sqft and had an initial investment of
Rs 35 million, hosting various brands in household durables and consumer electronics. It
strategically has an alliance with international organized retailer, Woolworth for back-
end operations. They plan to open out 40 stores by 2010 and Croma distinguishes itself
by providing one-stop shopping with customized consultation to the middle- and upper-
middle class customer segment.
E-Zone
E-Zone, an electronics specialty store, which has several brands all under one roof, was
launched by Future Group, in 2007 at Lucknow. They have an interesting store format
which consists of three dedicated zones - Liberation Zone, Experience Zone and Home
Zone to meet the electronic needs of the entire family. E-Zone competes with Croma, by
offering the best deals and low prices and is positioned more towards the lower-middle
and middle class customer segment. The company has expanded to 40 stores, all over
India in about 2 years.
Besides these top players, there are speciality stores dealing only with mobile phones,
laptops and exclusive dealers for the big electronic brands.
Key Drivers
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45% of the Indian population is below 25 years which accounts to close to 500 million
consumers (18+) of which 230 million are in Urban India. With the rising incomes and
education levels, the discretionary expenditure is increasing.
Figure 1 Share of Wallet - Indian Consumer Trends
With all the major players offering easy EMI schemes and with the increased
penetration of Credit cards, the Indian consumers now have an easier access to
consumer electronics
Gone are the times when people bought electronics with the intension of using it
for years together. With increasing speed of innovations and as new technologies
come in, the Indian consumer wants the latest and the best. Now mobile phones
are changed every year, laptops once in 2 years ,etc. People want to be trendy and
are becoming gizmo frenzy.
Challenges
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Price Wars
With the increase in price wars due to the entry of new players in the market and increase
in manufacturing capacity by some original manufacturers, the profitability and margins
of the companies are adversely affected. Hence companies need to increase focus on
product / store differentiation to address various segmental specific needs
Getting stock into a store in India is a massive challenge given the poor city roads and
complex intra city transportation regulations , high cost of moving goods between starts,
inefficient storage ( e.g. small store backrooms owing to expensive real estate). It is of
utmost importance to design an efficient network. Transportation, including railway
systems, highways has to meet global standards. Airport capacities, power supply,
warehouse facilities and timely distribution are other areas which need to be enhanced.
The distribution network is also highly fragmented and is very poor in semi-urban and
rural areas.
With the increase in access to Internet information, and availability of wide range of
choices, consumers have become quite smart. They want the product that is easy-to-
handle, good in quality and low in price. Most importantly, consumers want some
guarantee for the product that they are buying. The role of electronic companies doesn't
end on the sale of the product, but continues till the end of guarantee period.
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Trained manpower shortage in India
There is lack of talent in consumer electronics retailing. Retailers need to spend heavily
on training its sales force to match the expectations of the Indian consumers both in terms
of technical knowledge and soft skills.
References:
• http://www.dare.co.in/news/others/cut-duties-on-electronics-hardware-to-12-from-
30-assocham.htm
• Technopak, India
• Indian retail: on the fast track and time for bridging capability gaps – KPMG
Report
• www.univercell.in
• www.themobilestore.in
• www.viveks.com
• www.cromaretail.com
• www.next.co.in
• http://www.cci.in/pdf/surveys_reports/indias_retail_sector.pdf
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• http://www.articlesbase.com/marketing-articles/customer-buying-behaviour-
999729.html
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