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Submitted by Nitish Chugh MBA/11/45

VIDEOCON INDUSTRIES INDIA PVT. LTD. on the topic MARKETING of REFRIGERATORS

Submitted in partial fulfillment of the requirements of Master of Business Administration (MBA) Kurukshetra University, Kurukshetra

Submitted By Nitish chugh Roll. No. MBA/11/45 2nd sem

Department of Management Studies NC College of Engineering Israna, Panipat SESSION 2011 2013

INDEX
S NO TOPICS 1. CERTIFICATE 2. 3. ACKNOWLEDGMENT Introduction literature Business of company 4. 9. 10. 11. 12. 13. 14. 15. Achievements Founder & board of directors Distribustion Channels Promotions done by company Secondary Data Industry Analysis Products of the Company Recommendation & Suggestions Bibliography PAGE NO 1 2 3 6 7 8 9 10 12

To whom so ever it may concern

This is to certify that Mr./Ms. (Student Name) Roll No. MBA 4th sem. has completed his research project entitled (Title of the Research Project) under my supervision. It is his/her original work and fit for evaluation.

(Project Guide) Name

DECLARATION
I, , roll no., class..2nd

sem., N.C. College of Engg. Israna, Kurukshetra University, Kurukshetra hereby declare that the project entitled, .. is an original work and the same has been not submitted to any other institute for the award of any other degree.

Signature of the Candidate

Chapter 1

COMPANY PROFILE

The company currently manufactures Colour TVs, Black & White TVs and Audio product Videocon produces a sophisticated range of Home Audio Systems, Stereo Radio, Recorders and Personal Stereos, as well as the conteporary international range of Kenwood Digital Hi Fi Systems Continuous upgradation and indigenous manufacturing has been and continues to be an integral part of the company's philosophy. Perceived as an innovator in its fieVideoconhas notched up many exciting firsts, by exploring the world's most advanced technologies. In Colour TVs, Videocon was the first Indian Company to introduce Picture-In-Picture, Turbo Sound, Surround Sound, Larger Screen Sizes, the Full Flat Square Tube, Bazooka technology and the Freedom series : affordable high quality range of Colour TVs for the price-conscious consumer.

Global Ambition
Looking beyond India, Videocon is now a global player, acknowledged by the world. It is the first Indian company to win the prestigious CE approval for exporting its Colour TV to Europe. Videocon is now entering world market with its operations in the Middle East, Europe, Indonesia and South Africa. Videocon Narmada Glass (VNG): a division of Videocon International Ltd., has the distinction of having set up India's first plant for the manufacture of Glass Shells for Color Television Picture Tubes, in technical collaboration with Techneglas Inc., USA (formerly known as OI-NEG TV Products Inc., USA), world leader in Glass Shell Technology. The projects in 1990, when the then Prime Minister of India, the late Shri Rajiv Gandhi, laid the foundation stone for the project. The Videocon Group, with the objective of backward integration, joined hands with Gujarat Narmada Valley Fertilizers Co. Ltd., (GNFC) for the implementation of this 100% import substitution project, the largest investment (Rs. 450 crores) in electronic component industry in the country. The plant, with an installed annual capacity of 1.7 million Glass

Shells for Color Picture Tubes and 0.25 million glass Bulbs for Black & white Picture Tubes and Monochrome Monitor Tubes, is located at Village Chavai, District Bharuch, Gujarat.

The Heights of Success


VNG has some remarkable achievements to its credit, starting with the successful absorption of sophisticated technology from Techneglas Inc., USA. The CTV Glass Shells manufactured by VNG are at par with international standards and the Color Picture Tubes made with VNG glass have already received VDE approval. The facilities inlcude a stateof-the-art Tool Room and Mould Shop to manufacture and maintain its mould requirements. Having initially successfully established its 20V, 19V and 13V CTV glass parts, VNG has now developed the 20V 2R the latest models.

A Picture Perfect Future


Till 1994, Indian manufacturers of CTV Picture Tubes were importing Glass Shells. VNG's production has replaced these imports, thereby saving almost Rs.200 crores of precious foreign exchange every year. VNG has now surpassed the norms of performance guaranteed by the collaborator, Techneglas Inc., USA. and is operating the plant with 150% capacity utilization - with efficiencies exceeding international standards. Where fields of sugarcane grow tall and proud. Where bushes of cotton bud bloom. Where tourists flock to the world-famous caves of Ajanta and Ellora. Where India's NO.1 Consumer Electronics and Home Appliances take shape, to take millions of Indians into a better, brighter future. This is Marathwada, India, where the Dhoot family launched Videocon International Limited in 1984, with the avowed purpose of producing world-class Colour Television through a technical tie-up with Toshiba Corporation of Japan. Within a decade, Videocon emerged as India's leading brand of both Colour and Black & White Televisions and continues to dominate this highly competitive market. The leader innovates. The leader forges ahead. The leader breaks new ground. Harnessing the advanced technology, relentlessly pursuing quality to achieve various international standards of Quality Control. Breaking through, time and again, with innovative products for a better life.

Profiles of Leadership
Futuristic Neuro Fuzzy Logic Washing Machines, User-friendly - No-Frost Refrigerators, the very latest music systems. The most sophisticated Colour Television and VCRs. HighTech Air-conditioners. Videocon today, is a multi-faceted group, with 9 state -of-the-art manufacturing facilities all over India. Highly qualified engineers, trained in Japan, backed

by 6500 technical and support staff, work together in close unison to produce India's leading branch of consumer electronic products and home appliances.

Leadership through People


Videocon lays great emphasis on the training and development of its work force, providing every opportunity for growth and advancement, including training stints overseas.

FROM ELECTRONICS TO ENERGY - The Heart of Nation


1995 was a landmark year for Videocon. It clearly reaffirmed its leadership in Color TVs, Black & White TVs, VCRs and VCPs, Washing Machines as well as No-Frost Refrigerators. Then Videocon began to reach out to the core

HISTORY

Videocon is an Indian multinational with interests in Consumer Electronics, Home Appliances, Colour Picture Tube Glass, and Oil & Gas. Videocon was founded in 1987 by Nandlal Madhavlal Dhoot. At that time it used to manufacture TV and Washing Machine. In 1989-90, Videocon started manufacturing Home Entertainment Systems, Electric Motors & AC. Videocon entered Refrigerators and coolers segment in 1991. In 1995, Videocon started manufacturing Glass shells for CRT and in 1996 it ventured into Kitchen appliances and crude oil segment. By 1998, Videocon started manufacturing Compressors & Compressor Motors. In the year 2000, Videocon tookover Philips Color TV Plant. In 2005, Videocon tookover 3 plants of Electrolux India and acquired Thomson CPT. In March 2010, Videocon Industries Ltd.'s unit, Videocon Telecommunications Ltd., launched mobile services based on the global system for mobile platform. Today, it has evolved into a giant conglomerate with annual revenues of over U$4.1 billion, making it one of the largest consumer electronic and home appliance companies in India. Since 1998, it has expanded its operations globally, especially in the Middle East.

Business of Videocon

Consumer Electronics & Home consumer products like Colour Refrigerators, Microwave ovens refrigerator manufacturing enjoys technology in Bangalore.

Appliances: Videocon enjoys leadership position in Televisions, Washing Machines, Air Conditioners, and numerous other home appliances. Videocons synergy with its inhouse compressor manufacturing

Display industry and its components: After the acquisition of Thomson in 2005, Videocon has emerged as one of the largest Colour Picture tube manufacturers in the world. It has plants in Mexico, Italy, Poland and China and manufactures a range of hightech products such as slim CPT, extra slim CPT and High Definition 16:9 format CPT. Colour Picture Tube Glass: Videocon is one of the largest CPT Glass manufacturers in the world. It has plants in Poland and India. Videocons CPT Glass manufacturing complements its Colour Picture tube manufacturing business. Oil and Gas: Videocon Group has interests in oil & gas exploration, prospecting and intends to get into gas distribution. It produces 7% of all oil in the private sector in India. Videocons Ravva oil field has one of the lowest operating costs in the world and it produces 50,000 barrels of oil per day. Videocon is also actively looking for exploration and production opportunities in countries like Oman, Australia and the Timor Sea near Indonesia. The company reported revenues of (Rupee) INR 119,808.58 million during the fiscal year ended September 2008, a decrease of 5.37% from 2007. The operating profit of the company was INR 14,403.34 million during the fiscal year 2008, an increase of 55.69% over 2007. The net profit of the company was INR 10,989.31 million during the fiscal year 2008, an increase of 57.20% over 2007.

Major Achievements of Videocon Industries Ltd:

The largest panel production facility in the world under one roof providing very high economies of scale One of the worlds largest and most respected CRT glass manufacturers Firing the largest furnace of its kind in the world with a tank size of 3300 sq ft One of the few companies in the world to convert sand to TV One of the largest and most acknowledged CPT manufacturer in the world Manufactured Indias first rust-free Washing Machine

BOARD OF DIRECTORS

Mr. Venugopal N Dhoot Mr. Pradeepkumar N Dhoot Mr. K C Srivastava Mr. Satyapal Talwar Mr. S Padmanabhan Maj. Gen. S C N Jatar Mr. Arun L Bongirwar Mr. Radhey Shyam Agarwal Ms. Gunilla Nordstrom (Nominee - AB Electrolux (Publ) ) Dr. B N Singh (Nominee - IDBI Limited) Mr. Ajay Saraf (Nominee - ICICI Bank Limited)

DISTRIBUTION CHANNELS IN THE INDUSTRY


The Refrigerator companies in the industry use different distribution channels to reach the customer. These are as follows:

1. In this type of channel the company uses its sales representatives to deal with the dealers directly. The dealers place the order through the sales representatives who visit them periodically, and the products are delivered directly from the company. Some companies appoint Direct Dealers who act as their Franchisee Outlets or their Exclusive showrooms. BPL uses this channel

2. In this channel of distribution the company appoints distributors on the basis of District/ Population /No of Dealers to be handled by one distributor. The area of operation and its potential is also taken into consideration. Some of the companies make the distributor totally responsible from appointing the dealers to providing after sales service.

Kelvinator and Godrej use this channel

3. In this channel of distribution the company appoints Distributors as well as Direct Dealers. The company appoints distributors to deal with small dealers who order small quantities. With the dealers who have good potential and sales the company deals directly. Videocon and Samsung use this channel: The Korean Multinational follow this channel where they appoint Distributors for upcountry towns and direct dealers for big cities and major towns eg. Ahmedabad.

4. In this channel the company appoints a C&F agent who acts on behalf of the company. The C&F agent is totally responsible for appointment of Distributors and Direct Dealers. He sells to both the Distributors and the Direct Dealers at t

Promotions done by the company

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Videocon gives displays Promotional schemes are taken out in festivals Bio fresh Videocon 0% finance by Videocon Exchange offer by Videocon Kismat offer by Videocon High incentives by Videocon 0% interest by Videocon and finance facility by Videocon Carry back scheme Videocon Exchange offer by kelvinator Pentacool new advertisement by electrolux

SECONDARY DATA COLLECTION AND ANALYSIS

REFRIGERATOR INDUSTRY AT A GLANCE


Refrigerators are being manufactured in India for the last four decades. Till early nineties only direct cool refrigerators were used in India. Videocon introduced frost-free refrigerators in 1991. In 2007-08 the market was as follows:

Segment Price % Market Share Direct Cooling Low 85% Frost Free 35-40% more than DC 15% Based on the Capacity and price the market was divided as follows in 2007-08

Segment Top High Medium Low

Price >20000 15-20000 Upto 15000 <8-9000

Capacity >300 Ltrs >230 Ltrs 165-230 Ltrs Upto 90 Ltrs

% Share 3% 7% 85% 5%

In 2007-08 the penetration levels were approx. 9% In 2007-08 the demand distribution as per the Income class was as follows: Penetration % 0.7%

Income Class Low

Lower Middle Middle Upper Middle High Total

5.3% 19.8% 43.5% 59.9% 8.61%

In 2007-08 the demand distribution as per markets was as follows: Urban Rural 2.04 24.3 Total 8.61 100

Penetration % Share of Purchase%

25.23 75.7

Past trends
Demand for refrigerators grew from 11,000 units in 1968-69 to about 2.25 million units in 2007-08

Demand for refrigerators has grown at a CAGR of around 22% from 1.04 mn units in 1992-93 to 2.18 mn units in 2007-08. The total stock went up from 3.3 million units in 1968-69 to 17.2 million units in 1996-97, but still covering only about half of the total households in middle and high-income groups.

Current Scenario
The current demand for refrigerators is approx. 2.9 mn units per annum. The 165-200 Ltrs of refrigerators comprise of 80% of the total demand. Frost Free refrigerators contribute 15% of the total demand with 5% coming from the premium range.

The market structure is as follows:


Segment North East West South Rural Urban Household Institutional Share(%) 25% 14% 32% 29% 25% 75% 85% 15%

The replacement demand is about 20% of the total demand and shows preference for larger and technically advanced models. Demand for the frost-free refrigerator is increasing rapidly.

Feature based differentiation and various price points for same capacity emerge in the top and high categories. Some of the features, individually or together are used for differentiation. No and type of doors. Crushed ice and water dispenser Quick chilling zones Multiple temperature zones Adjustable racks and shelves Multiple use compartments Refrigerant CFC free Vs CFC Energy efficient compressor Freezer space vis a vis Refrigeration space

Future Trends
Replacement market is expected to increase to 25-30% on account of faster replacement (further induced by exchange scheme). Refrigerator market is expected to grow at a CAGR of 14% in the medium term aided by the rising per capita income and growing consumerism. The demand for refrigerators is expected to be about 3.6 million units in 2000-01 with a penetration rate of about 13% As specified by the Montreal Protocol the use of refrigerants such as CFC-11 and

CFC-12 need to be phased out by 2010.

COMPANIES IN THE REFRIGERATOR MARKET


The leading companies in the market with their market share in first half. TOTAL MARKET BRAND Godrej Whirlpool Videocon Kelvinator Allwyn Voltas BPL GE LG Samsung Electrolux Total Sales(Units) 396000 349000 199000 194000 178000 83000 85000 14000 10000 8000 1000 1535000 % Share 25.6% 22.5% 13.0% 12.6% 11.6% 5.4% 5.5% 0.9% 0.7% 0.5% 1.5% 100% 180000 100%` 83000 14000 7000 8000 7.4% % 4.0% 4.6% FROST FREE SEGMENT Sales(Units) 25000 8000 21000 % Share 14.3% 4.6% 12.0%

Kelvinator has acquired Voltas and Allywn and thus their total market share comes to 29.6% of the total refrigerator market.

INDUSTRY ANALYSIS (REFRIGERATOR INDUSTRY IN INDIA) PORTERS FIVE FORCES MODEL 1.THREAT OF ENTRY Barriers of entry Economies of scale
The players like Godrej, BPL , Whirlpool, Videocon and Voltas have achieved economies of scale. Godrej has a capacity utilization of 75% and the highest capacity in the industry. This declines their unit cost of every function of business and enables them to keep their prices low. This will force the entrant to come in at a large scale and risk strong reactions from them or come at a small scale and accept a cost and price disadvantage. Godrej also possesses economies of vertical integration as it manufactures its own compressors, which constitutes a substantial part of the manufacturing cost. The other players like BPL and Videocon who are currently outsourcing their compressors also plan to set up their own manufacturing units for compressors in the long run.

Product differentiation
The companies like Godrej, BPL and Videocon, being very old players in the Indian market enjoy high brand awareness and consumer loyalties. These brand names are associated with trust and reliability in the Indian market. The Korean players like LG and Samsung who engaged in heavy advertising and brand promotion during the last year have also created a niche for them in the premium segment. Their brand awareness has grown tremendously after the recent Cricket World Cup Tournament, during which they advertised heavily. These create a barrier to entry by forcing the entrant to spend heavily to overcome existing consumer loyalties and to build a brand image.

Capital Requirements

Huge Capital requirements are posed in front of the new entrant in terms of advertising, product development, Production facilities, Distribution channel credit, inventories and for covering up the start-up losses.

Access to the distribution channels


The Indian players like Godrej, Videocon ,Voltas and Allwyn which are catering to the mass market have a strong distribution and dealer network.. They have a presence in the urban as well as the rural areas. Moreover these companies have established developed ties with the channel members over the period of time, which are hard to break. Whirlpool has also developed a strong network of 4000 dealers in urban and semi urban areas in a period of few years. The South Korean Majors like Samsung and LG have a dealer network of more than 1500, mainly in urban areas and plan to expand it in rural and semi urban areas also. This poses a major th7reat in front of the new entrant as the existing firms already serve the channels and the new entrant will have to persuade the channels to accept its product through high margins, promotional allowances, better credit facilities and advertising support, which will reduce the profits.

Cost disadvantage independent of scale


Learning or Experience curve: The old players like Godrej, BPL, Videocon are high on the experience curve, as they know the Indian Market well. This Experience lowers their costs in production, marketing, and distribution and in other areas of business, thus giving a cost disadvantage to the new entrant.

Government policy
The Government policies of levying duties on the imported Refrigerators and refrigerator parts gives an advantage to the Indian Players and in a way protect them from price competition in the market with the MNCs.

Expected retaliation

The industry as a whole faces excess capacity and the supply exceeds demand and so the existing competitors are expected to respond forcefully to a new entrant. The new entrant will face competition based on the segment to which it tries to cater. If the company enters in the Direct cool segment Godrej, Kelvinator, and Whirlpool will pose the major threat. If the company enters in the Frost free, high capacity segment (above 300 Ltrs) it will have to face main competition from LG, Samsung, Kelvinator, BPL and Whirlpool.

2. INTENSITY COMPETITORS

OF

RIVALRY

AMONG

THE

EXISTING

The companies in the Refrigerator industry of India can be divided into four strategic groups based on the price and the perceived quality of the products. These groups also differ in their target segments and the strategies adopted to cater to it.

High Perceived

High Price 1.PREMIUM STRATEGY

Medium Price 2. HIGH VALUE STRATEGY

Low Price 3. SUPER VALUE STRATEGY

(1)LG, Samsung, (2) Whirlpool, BPL Quality Moderate Perceived STRATEGY (3) Godrej , Kelvinator Quality Low Perceived (5)Voltas, Allwyn Quality 7. RIP OFF STRATEGY 8. FALSE ECONOMY STRATEGY (4) Videocon 9. ECONOMY STRATEGY Kelvinator 4. OVER CHARGE 5. MEDIUM VALUE 6. GOOD VALUE

STRATEGY

STRATEGY

LG, Samsung, Kelvinator


This strategic group includes the South Korean MNCs. These are the players who are operating only in the frost-free segment and carry a large product length. They have products only in the above 300 Ltrs segment. These brands follow the Premium strategy of high quality at high price. They are targeting to the upper income as well as the higher middle class of the society with the products that are associated with status. These companies have shown a tremendous growth in few years.

BPL, Whirlpool

BPL, the market leader in the Frost-free segment and Whirlpool of India, the subsidiary company of the US giant Whirlpool form this group. They have frost-free models in the below 300 Ltrs capacity segments as well as the above 300 Ltrs segment. The models in above 300 Ltrs segment cater to the replacement market and to the higher middle class. These aim at providing high quality at a moderate price. The models in the below 300 Ltrs are targeted at the first time buyers of middle class and are not high in price.

Godrej, Kelvinator
These are the old brands of India, which have high brand awareness and presence in urban as well as the rural Markets. These are mainly serving to the Direct cool segment and have few models in the frost-free segment. These brands are catering to the middle class and are not very high in prices.

Videocon
This is the company, which introduced Frost-free refrigerators in India. The products are value for money products. With the lowest prices in the market it is catering to the middle class of the society.

Voltas Allwyn
These companies cater to the middle and lower middle class of buyers with their low priced ranges. The companies in the market witness a tough competition from the other members of its strategic group as they fight for the same chunk of the market. As their products do not differ much in the features, they try to differentiate their brands through copy differentiation in advertising.

3. PRESSURE FROM THE SUBSTITUTES


The domestic refrigerators have no substitutes and so it faces no threats in terms of that.

4. BARGAINING POWER OF THE BUYERS

The bargaining power of the consumers is high due to the presence of many competitive products in the market. The refrigerator models available are not much differentiated in terms of the features, and so the buyers can switch between the different brands based on other criteria like Price, service, warranty, promotion and financing schemes.

5. BARGAINING POWER OF THE SUPPLIERS


Not very High

PRODUCTS OF VIDEOCON

Refrigerator Home Direct Cool Frost free Water matic Washing Machine Home Air Conditioner Home Microwave Home

RNV271 DIGITAL SENSI FLOW DURAFRESH PLATINUM DEODORISER GREEN HOUSE CRISPER SIX YEARS WARRANTY

RNV275

DIGITAL SENSI FLOW DURAFRESH PLATINUM DEODORIZER GREEN HOUSE STYLISH EURO HANDLE 6 YEARS WARRANTY

RNR312 SENSI FLOW SYSTEM DURAFRESH PLATINUM DEODORIZER GREEN HOUSE CRISPER RECESSED HANDLE 6 YEARS WARRANTY

RNV312 SENSI FLOW SYSTEM DURAFRESH PLATINUM DEODORIZER GREEN HOUSE CRISPER VERTICAL HANDLE 6 YEARS WARRANTY

D380MF

No Frost Multi Flow System Antibiotic Deodorizer New Edge Door design New Style Vertical Handle 6 Years Warranty

D452MF INBUILT DEODORIZER FULLY AUTOMATIC DEFROSTING SYSTEM MULTIFLOW COOLING SYSTEM 6 YEARS WARRANTY

Customers main preference while buying refrigerators

a) b) c) d) e) f) g)

Brand = 64% say that the customers prefer brand name Price = 84% of the customers look for price Feature = 90% see the features while buying. Service= 20 % see for services Promotion schemes= 12% see the promotional scheme. Word of mouth = 18 % go for word of mouth. Dealers advise= 32% go for the dealers advise.

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Promotion Scheme Word of mouth Service Feature Dealers advise Brand Price

Findings and recommendations


Freezer should be small No crystal, grill shelf should be there No MRP is written. So MRP should be written Date of manufacturing is not written Model change should be there constantly Double door refrigerator should be provided.

In todays world of competition, the company should pay more attention

towards: Best sales service Displays In festivals we do promotions 0% finance Exchange offer High incentives 0% interest Carry back scheme

BIBLIOGRAPHY Books
Philip Kotler for Marketing Management

Web site:
www.videoconinternational.com

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